Have You Insured Your Biggest Asset?

Insurance is one of those strange commodities that we have ‘just in case’. The best case scenario is you never make a claim!

If you haven’t had to access your house, contents, car or other insurance this year you can breathe a sigh of relief. If you have been unlucky enough to make a major insurance claim you would have thanked your lucky stars that you had good quality cover and that life could resume pretty much as normal without major disruption.

What is your most significant asset? Would you think it was your business, your house, your car? The real answer is none of the above because it’s really your ability to earn income over your lifetime. You only need to look at the numbers, if you start out earning $40,000 per year (increasing only with inflation set at 1.5% per annum) for forty years, your total gross earnings would be around $2.25 million. If you earn around $75,000 from age 35 to 65 your total gross earnings for that thirty year period would be $2.9 million ($3.9 million if your starting point was $100,000 for thirty years).

An income protection policy can protect your most valuable asset. Make sure you take the time to investigate the providers because not all policies are the same. Some might have fundamental differences in the medical definitions which are crucial as to whether you will or won’t receive your salary continuance benefit if you are unable to work due to accident or illness.

Also check the length of the benefit period. Some policies, especially when held within a superannuation fund, are for as short a period as two years. Although two years of salary continuance is helpful, it is not replacement for your lifelong income, so a policy replacing income until age 65 might be more appropriate.

If you’re contemplating taking out income protection insurance talk to us today.

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IMPORTANT DISCLAIMER:This newsletter is issued as a guide to clients and for their private information. This newsletter does not constitute advice. Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of these areas.