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Income protection - not just about you

If you’re looking forward to the end of your career and your working days are numbered, you might not consider income protection insurance as a priority. Whilst that is entirely your decision, it may impact upon your children or your parents if you lost your ability to earn an income and needed their financial support, as these two scenarios explain.

Scenario 1
Rob was in his late 40s and planned on retiring earlier than the normal retirement age. He lived alone and didn’t have children or siblings. His closest relatives were his parents, who enjoyed good health and lived close by. Having no dependents, he felt income protection was not necessary in his current situation.

Some years later, Rob changed jobs and fell ill shortly after making the transition to his new position. Assuming the condition was stress-related, he hoped it would pass quickly. Sadly, his early symptoms were more ominous than he had suspected. A cancer diagnosis came as a huge shock to him, and his parents. Forced to leave his job, Rob had no source of income to meet his mortgage repayments nor his medical expenses. He struggled to make ends meet.

Fortunately, Rob’s parents were willing to offer both emotional and financial support to help him convalesce and keep his head above water when it came to paying the bills. Sadly, Rob’s treatment was lengthy and his parents were forced to sell their investment property to help fund his ongoing medical expenses and other commitments. Their investment property had been intended to help pay for their aged care, when the time came. Further, Rob was in no position to take early retirement.

Scenario 2
Sarah was a 55-year-old single mum with two adult children who lived at home whilst going to university. Sarah worked from home and ran a successful architecture consultancy practice, along with a business partner. She had plans to sell her share of the business within three years and opted not to bother with income protection insurance.

Sadly, whilst on vacation, Sarah was involved in an electrical fire and sustained burns to 50% of her body. A lengthy hospital stay followed and she was unable to work for the next six months.

After the accident, Sarah’s children were forced to suspend their university studies, in order to take up employment to help their mother meet her mortgage repayments and medical bills. Each of her offspring also dipped into their savings they had previously earmarked for their first homes. Likewise, Sarah’s retirement nest egg had been wiped out by the end of her treatment.

The alternative…
Both of these scenarios above could have been avoided had Sarah and Rob invested in income protection insurance. Your ability to earn an income is, arguably, your most precious asset as it enables you to live the lifestyle you currently enjoy. Protecting this asset can help you sustain that lifestyle, even when fate strikes you a blow.

Failure to protect your income (as illustrated above) could have dire repercussions for not only your financial future but the financial future of your family, should they be called upon to assist you.

Your financial adviser can talk you through a personal protection strategy tailored to your specific needs. By reviewing your existing insurances (to ensure you are appropriately covered and not under or over insured) or by starting from scratch, you can put your mind at ease knowing you and your family will be protected should the worst happen.

Further, your insurances may not necessarily impact upon your cash flow, as you may be able to meet your premiums through your existing superannuation fund.

If you would like to discuss a tailor made income protection solution please contact us on (02) 6041 8244.

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