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What would happen if you couldn’t work?

15 Feb 2012 11:03 AM -

If you were paid the average annual wage of over $60,000, you would earn almost two and a half million dollars in a 40-year working life.  You would use this money for daily living, for holidays, to accumulate assets like a house and car and to save for your retirement.  Being injured or taken ill, for only a short period, could severely affect or even cancel some of these plans.

 

Statistics show that being unable to work because of a disability is more likely than you’d think.  For instance, there is a one in three chance you can expect to be off work for three months or more before you reach age 65. 

 

What would you do?

Your income may be replaced from a number of sources. 

  • If it is a work-related injury or illness, workers compensation may pay your basic wage and medical expenses until you return to work.
  • You may have accumulated sick leave if you’ve been with the same employer for some years.
  • You may have savings you can access.

 

But this may only meet nominal living expenses - you may have to continue servicing loans and pay medical expenses, some of which may not be covered by Medicare.  How will you do that?

 

Insuring the risk

Income protection insurance usually pays up to 75% of your normal pay whilst you’re off work.  You can tailor a policy to suit your situation.  For instance,

  • How long must you be off work before payments start?  This can be as short as two weeks or as long as six months.
  • How long will the income be paid for?  This can be for a short period (like 2 years) or until age 65.

 

Most policies will require you to be unable to do your own job although some include rehabilitation benefits as you gradually get back into the workforce. 

 

Premiums are tax deductible and the income is taxed in the normal way through the PAYG system.

 

Don’t become another statistic.  Contact us now about investing in an income protection policy to suit your circumstances and your current responsibilities.  You will sleep easier knowing your financial plans will stay on track regardless of sickness or injury.

 

 

Sources:

 

www.abs.gov.au, Australian Bureau of Statistics, Table 4364.0

www.abs.gov.au, Australian Bureau of Statistics, Table 6302.0

 

It’s never too early to invest in your future