The Weekly Advertiser

Insure your income

Your income is the foundation upon which your family’s financial plans are built and in most people’s lives there won’t be a larger asset to protect than their cumulative income.

Consider this – a 40-year-old man earning $75,000 a year with salary increases of five percent each consecutive year will earn over three and a half million dollars by the time he turns 65. When it’s put that way your income is certainly worth insuring.

Life has a habit of throwing up hurdles, usually at the most inconvenient times. It’s impossible to know what’s going to happen in your life but insuring against potential problems reduces the risk that you may not achieve your goals.

Basically, to achieve your life plans you need to maintain your cash flow, so what happens if it should suddenly stop? Income protection insurance will replace 75 percent of your income if you can’t work due to accident or sickness and it is also tax-deductible.

It isn’t a replacement for workers’ compensation, sick leave or private health insurance. It is a long-term solution that should be tailored to work in combination with these and other insurance types.

Could this be you?

Jim was a 40-year-old carpenter who fractured his leg in three places when he fell off a trampoline playing with his son. His financial circumstances were:

1. Rent of $1800 a month;

2. Child maintenance payments of $750 a month;

3. School fees $500 a month, paid annually and due shortly;

4. General living expenses – food, electricity, petrol and so on, $1200 a month;

5. Car repayments $420 a month.

Due to the severity of the break, Jim was off work for 10 months. The accident cost him more than $50,000 in lost income and all of his savings.

He borrowed from his ageing father to cover shortfalls such as school fees and rent.

After his recovery, Jim found it difficult to work as a carpenter because his injury affected his ability to climb ladders and maintain adequate balance.

If Jim had income protection insurance with the appropriate conditions and terms he would have been able to recuperate without the stress of huge financial pressures. Additionally he might have received ongoing partial income while he retrained for another career.

Consider your own circumstances in the event of misfortune and ask yourself honestly – how would my situation unfold? Then discuss your current protection and possible strategies with a licensed financial adviser.

• Robert Goudie is an authorised representative at Meritum Financial Group Pty Ltd AFSL 245569.

 

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For further information please visit http://www.meritumfg.com.au/

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Posted on Oct 29 2014

Posted by on Oct 29 2014. Filed under Finance advice. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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