Centrewest Insurance Brokers Newsletter
As the weather gets warmer into summer we inevitably face the higher chance of a bushfire. Every year we see examples of people being under insured following a large claim.
The State Government has an initiative to assist home owners and businesses with being prepared for the bushfire season. The comprehensive but easy to read booklet can be found at http://areyouready.wa.gov.au/.
Don’t forget to review the value of your home, contents or business insurance to ensure your building and contents are adequately insured. Visit www.centrewest.com.au and click on the links Home Building or Home Contents Calculators, these easy to use calculators will assist you in assessing the sum insured you require. Or else contact your Centrewest Account Manager for additional information.
Income Protection Insurance
WHAT ARE YOU REALLY WORTH?
Imagine you’ve designed a machine that over the next 20 years could print you over $2 million in bank notes (ignoring the legalities for a moment!). You’d keep that machine pretty safe. It would probably be the most valuable thing in your life. You’d insure it, if you could.
Yet if you’re on a salary of $60,000 a year, you’ll earn over $2.2 million over the next 20 years^. So, isn’t that worth protecting too?
Income protection insurance pays you an ongoing monthly amount of up to 75% of your salary if you can’t work because of illness or injury.
So what would happen if you got sick or injured and your income stopped? If you were on long-term sick leave, how would you cope?
For how long would you receive sick pay?
Even if you’ve got cash reserves or investments you could quickly sell, would you want to blow all your savings just to stay afloat?
Would you have to ask for support from your parents, in-laws or grown-up children? What might that mean for their own financial plans?
IT’S NOT INCOME PROTECTION – IT’S EVERYTHING PROTECTION
Car, food, bills, clothing, holidays, school expenses… just about all life’s essentials come at a hefty price. And what about the mortgage? It’s a horrible thought – but imagine battling cancer and facing the possibility of losing your home at the same time.
WHAT IS INCOME PROTECTION INSURANCE?
If you were injured tomorrow in a car accident, would you get more insurance money for your car – or for yourself?
Income protection pays an ongoing monthly amount (usually up to 75% of your salary) if you can’t earn an income because of illness or injury. It gives you the financial freedom to focus on your recovery or treatment, without having to worry about paying the mortgage and other bills – such as the hefty medical expenses you could be facing too.
Another way of looking at it is to think of income protection as a means of simply staying afloat if your real income stops because of illness or injury, whereas other types of insurance such as trauma cover pay one-off lump sum that could be used for your medical expenses, to pay down your mortgage – or on whatever you like.
Unlike other life insurance premiums, income protection insurance premiums are usually tax-deductible.
Have a chat with a member of our Centrewest Financial Services team if you’re not sure if your income is adequately protected against illness and injury and if you’d like to know more about how salary sacrifice could work for you.
^ Assumptions: Additional retirement savings are expressed in future dollars. 6.5% gross investment return.
The above is a section of the 'Thinking About Money' Winter 2014 Edition produced by Guardian Advice