We rarely think twice about insuring our car, our house and even our possessions, yet we often overlook protecting our most important asset — our income.
Life insurance, disability insurance and income protection insurance play a vital role in protecting your income and your lifestyle. It provides the financial means to preserve your way of life, or that of your family, in the event of an accident, serious illness or even death.
So what’s stopping you from taking it out? Maybe it’s one of these commonly held myths?
Myth: “I have enough insurance in my superannuation”
Fact: You may be surprised at how little this amount of cover actually is and how many of the essential insurance extras have been removed. Research shows that almost half of industry super fund members are underinsured by $100,000 for life cover and by $1,000 per month for income protection cover.
Myth: “Insurance premiums are too expensive”
Fact: They are actually no more expensive than a daily cup of takeaway coffee. The average non-smoking 31 year old male, married with two children and earning $75,000 per annum can obtain $750,000 life cover and $100,000 trauma cover for around $2.80 a day! The other good news is that insurance premiums for income protection, life and TPD (total and permanent disability) can be deducted from your super, which also means they can be tax deductible. To make them even more affordable, consider the difference between taking out cover based on stepped and level premiums.
Myth: “I don’t earn an income, so I don’t need insurance”
Fact: Just because you are a stay-at-home parent, doesn’t mean you don’t need life insurance. If you are no longer around, your family would require a lot of assistance and your partner may have to reduce their working hours to look after the household or employ outside help. Families losing stay-at-home parents may require more than $75,000 per year for child care or home help expenses.
Myth: “I’m young, healthy and debt free, so I don’t need insurance”
Fact: A young person’s most valuable asset is his ability to earn an income, so it makes sense that insurance should play an integral part in his life. While it is true that a young, debt-free person may not need comprehensive insurance across all products, what happens if he becomes ill or disabled and couldn’t work? This is when income protection, trauma insurance and TPD insurance become options to consider. ###