Income Protection Cover

It’s time to look at what the different types of income protection cover you can put in place to protect yourself and the things in your life that matter to you.

The first cover I am going to talk about is what I believe to be the most important for millennials: income protection.

What you are protecting with this policy is your greatest asset, which is our ability to earn an income.

If you are 30 years old and earning an income of $80,000 per annum between now and the age of 65 you will earn approximately $2,800,000 over the next 35 years!*

By taking out income protection cover and insuring yourself for your working life, you are protecting an asset that is worth $2,800,000 to you! This sum of money is going to determine how many of your goals you achieve, what sort of lifestyle you live and where you end up in life!

Below are a few points on what is included with an income protection policy, so you can get your head around what is protected and how the policy works.

Monthly benefit

This is the amount of cover you are allowed to insure (monthly benefit is 75% of your taxable income /12) and is the figure that would be paid to you monthly in the event of a successful claim.

Waiting period

This is the time you must be off work due to your accident or sickness before a claim can commence. Common waiting periods are 30, 60, 90 and 180 days.

Benefit period

This is the amount of time that the claim can be paid if required. The insurer will usually pay until you are back at work full time or the policy expires. WE’s standard benefit period option is until the age of 65 but there are shorter options available like two and five years time.

What is covered?

Income protection will provide a monthly benefit to the insured once they have been unable to work for longer than their waiting period due to ANY accident or sickness. There are no specific conditions covered. The main determining factor is your time off work due to the accident or sickness.

That is an overview of income protection cover.

I hope it has been informative and has shown you not only why you need to have cover in place but also helped you understand the policy, how it works and why it is so important for millennials to have in place.

If you had the goose that laid the golden egg, what would you insure? The goose or the egg?

The answer is simple, isn’t it! Of course, it would be the goose because we can always get more eggs.

Now have a think about all the eggs in your life that you have insured. There’s your car, your home, your contents, even your phone.

But is the thing that has paid for all those eggs, and will continue to pay for them in the future, insured?

I will leave that one with you!

*Example does not factor in tax or inflation or future pay increases

The information above is general in nature and does not take into account your personal circumstances. If you’d like to discuss your personal circumstances in more detail, book an appointment for a Free Strategy Session. Let’s get your cover ASAP!

 


Disclaimer: Information contained within this article is of a general nature. Do not be rely upon it when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.