A common concern people have when they consider insurance is that they can’t afford it, “I don’t earn enough to insure my salary!” Ohh the irony! The affordability fears are a catch twenty-two, because ultimately you can’t afford not to have insurance. Truth is, most of us rely on our income. So if you can’t work due to illness or injury, you don’t get paid… and when you don’t get paid, you can’t pay your bills, and when you can’t pay your bills… Down the rabbit hole you go.
Income protection insurance is particularly important if you’re self-employed, own a small business, or you’re a technician, and rely on your ability to work. Income protection insurance replaces, or continues a percentage of your income in the event you’re unable to work due to illness or injury. In most cases when working with insurance companies, you can choose the level of cover to best suit your requirements and select a policy that is right for you. There are some benefits associated with insurance held in your own name, as premiums (for income protection) are generally tax deductible. But policies can be confusing, be aware of variations between the range of benefits offered, and definitions (particularly relating to disability) covered, and as always, make sure you understand what you’re signing up for.
If you’re really concerned about your access to cash and ability to outlay monies for premiums, check your superannuation. Why? Because some superannuation funds include basic, or minimum level income protection insurance, so check your level of cover and understand if it’s enough for you. You generally have capacity within your superannuation to increase your level of cover to appropriately meet your needs, and the premiums are deducted from your super – not impacting your current cash flow, though reducing your future super.
Some superannuation funds offer limited/level of cover, whilst some waive health checks altogether and automatically accept you for cover – which makes sense given the mass policies often purchased by super funds. So it also makes sense that there could be delays in payment of benefits – given the masses.
As with most things, there are pro’s and con’s. Do some research and weigh up if an individual policy or insurance through super is best for you. If you would like to discuss the workings of your super, and insurances in general, contact us.
**Note, if you are one of those included in the figure of over 40% of super account holders who have more than one account, you could be paying insurance in each of your funds (this is known as wasting money and requires your attention.)
Contributed by Mel Ross