If you were paid the average annual wage of $82,804 (1), you could potentially earn $10,000,000 over a 40-year working life (2). You would use this money for daily living, for holidays, to accumulate assets like a house and car and to save for your retirement. Being injured or taken ill, for only a short period, could severely affect or even cancel some of these plans.
What would you do?
Your income may be replaced from a number of sources:
- If it is a work-related injury or illness, workers compensation may pay your basic wage and medical expenses until you return to work.
- You may have accumulated sick leave if you’ve been with the same employer for some years.
- You may have savings you can access.
But this may only meet nominal living expenses – you might have to continue servicing loans and pay medical expenses, some of which may not be covered by Medicare or your private health fund. How
will you do that?
Insuring the risk
Income protection insurance usually pays up to 75% of your normal pay whilst you’re off work. You can tailor a policy to suit your situation. For instance,
- How long must you be off work before payments start? This can be as short as two weeks or as long as six months.
- How long will you receive the income? This can be for a short period (like two years) or until age 65.
Most policies will require you to be unable to do your own job although some include rehabilitation benefits as you gradually get back into the workforce.
Premiums are usually tax-deductible and the income is taxed in the normal way through the PAYG system.
Don’t become another statistic. Please always feel welcome to contact us at any time to enquire about investing in an income protection policy to suit your circumstances and your current responsibilities.
You will sleep easier knowing that your lifestyle and financial plans will stay on track regardless of sickness or injury.
(1) Based on full-time adult average weekly total earnings.
(2) Assuming a 5% annual wage increase.
General Advice Disclaimer
This article contains general advice only, which has been prepared without taking into account the objectives, financial situation or needs of any person. You should, therefore, consider the appropriateness of the information in light of your own objectives, financial situation or needs and read all relevant Product Disclosure Statements before acting on the information. Whilst every care has been taken to ensure the accuracy of the material, Paradigm Strategic Planning or WealthSure Financial Services Pty Ltd will not bear responsibility or liability for any action taken by any person, persons or organisation on the purported basis of information contained herein. Without limiting the generality of the foregoing, no person, persons or organisation should invest monies or take action on reliance of the material contained herein but instead should satisfy themselves independently of the appropriateness of such action.