Would you be able to survive financially if you couldn’t work due to illness or injury? No matter how careful or healthy you are, it can be difficult to predict the future. Something legal firms hear a lot when dealing with personal injury or workers’ compensation claims is that their clients ‘didn’t think it could happen to them’. Don’t be caught out.
Having income protection insurance is something that every working person should consider. If you find yourself unable to work, it typically pays out up to 75% of your income until you are either able to start working again or reach retirement age. Read on below to find out why income protection insurance is something that everyone should consider.
1. Your Superannuation May Not Cover You
Often people assume that they will be ok because their superannuation has a clause that protects them against death or permanent disability. Be aware that if you change super funds – or your employer stops making contributions – your cover may stop. Make sure you regularly check your superannuation entitlements and status to ensure you are still covered.
2. Premiums Are Usually Tax Deductible
Nearly everyone is looking for a way to reduce their taxable income. As income protection insurance is an expense incurred while earning your wage and will be taxed in the event of a payout, you can claim the premiums when you submit your annual tax return. You can’t claim if the premiums are covered by your superannuation fund though.
3. Government Benefits Aren’t Always Enough
People without sufficient cover who find themselves sick or injured often have to turn to government assistance. Unfortunately these payments are usually nowhere near the type of money people earn from a wage so even if you are eligible for assistance, it may not be enough to cover everything like your mortgage or other repayments. There are also often waiting periods associated with receiving government payments and eligibility may be means tested.
4. It’s Peace of Mind
If you are sick or injured, the last thing you need to do is be worrying about how you’re going to provide for your family and make ends meet or be fending off calls from collection agencies if you fall behind in bills and other repayments. Income protection insurance premiums may seem like an unnecessary expense – until that is, you actually need to use the cover.
5. It May Keep Paying Super For You
Some insurance policies will also contribute to your superannuation fund. If you have this option, it is worth seriously considering even if the premiums are a little higher. Unless you contribute to your own super, any time out of the workforce means there is less money going towards your retirement.
Unless you have a crystal ball, don’t leave your family’s financial security to chance. Do a health check on your finances now and make sure that all of your insurances – including income protection – are up to date and working for you.
Do you have income protection insurance?