Life insurance products, including income protection, tend to confuse Aussies. Because of this, so many of us fail to properly appreciate the benefits of them.
So, why get income protection? You’re possibly parting with significant cash over the long term, so what’s the upside? Well, this form of insurance potentially replaces up to 75% of your income (with an added 10% contributed towards superannuation) if illness or injury prevents you from working. This could have a number of benefits.
Keep paying off the mortgage. A survey by insurer Asteron Life details the ‘triggers’ that motivated Aussies to get income protection:
New home owners are committed to a hefty debt as soon as the ink dries on their home loan documents. Many of these loans aren’t paid off for years, even decades. Could you afford these repayments if you were no longer fit to work?
Stay on top of debt, even without an income. When you get sick, your other bills and debts don’t disappear either. In fact, you might accumulate more debt due to an expensive recovery. Income protection can ease the pressure of managing those bills.
Focus on recovery. Financial stress isn’t a welcome bedfellow when you’re recovering from illness or injury. In fact, any stress can potentially be detrimental to your rehabilitation. Wouldn’t it be better if all you had to worry about was getting healthy again?
Maintain your current quality of life. Income protection is great for anyone who is worried they’ll have to drastically change their routine and lifestyle when they get sick or injured. Depending on your incapacitation, this may be inevitable. However, minimal financial disruption can ensure you feel better about your situation.
No workers’ compensation? No problem. Your injury or illness may mean you qualify for workers compensation. That’s great; although the amount you’ll get in income protection is offset against any workers compensation you qualify for. But, if you don’t qualify for workers compensation, income protection can be a welcome safety net.
Reassurance to your family. If you are unable to work, your medical bills may become expensive. With the proper income protection policy in place, you’ll be able to dismiss some of those expenses. As an added bonus, nearly two in five Aussies report they feel ‘peace of mind’ that their family will be okay once they get insurance, according to a survey from Asteron Life.
There may be tax benefits. Did you know you could claim income protection premiums on your tax return? We explain how in another article.
Statistically, it could happen to you. Risk of stroke and cancer is significant in Australia, and while it’s unpleasant to consider this happening to us, we can’t shy away from the possibility.
Additionally, up to 28% of all income protection claims occurred because of accidents, according to another Asteron Life source. No matter how healthy a life you lead, these figures prove you certainly can’t account for accidents.
If we’ve proven anything, it’s how income protection provides security. We talk a lot about ‘peace of mind’ when it comes to products like these, but the fact of the matter is that you’ll be relieved you have it during tough times.
The information provided here is general only and does not consider your personal objectives, financial situation or needs. Before you decide to purchase a product, it is important to read the relevant PDS.