How would you cope if your income was suddenly to stop because an accident or illness prevented you from working? Do you have enough saved up to cover your rent or mortgage, bills and living expenses for a month? Three months? What about six months or longer?
If you’re an employee you will probably have ten days a year of sick pay available. If you’re self-employed you’ll have none. So what do you do when something more serious than a cold or flu puts you out of action?
That’s where Income Protection comes in. Income Protection, also known as Disability Income or Salary Continuance, pays you a monthly benefit for as long as sickness or injury stops you earning your usual income. The amount can be anything up to 75% of your taxable income and you can choose a benefit period of 2 years, 5 years or until you turn 65.
How many people do you know who are completely debt-free? Chances are it’s not too many. Most of us have a mortgage, maybe a car loan, credit card debt or a business loan. It’s not uncommon these days to have half a million dollars or more in personal liabilities. But what happens to those debts when we die?
The unfortunate reality is that the debts are inherited by our estate and passed on to the family members we leave behind. This can be a tremendous financial burden, particularly when you’ve been the sole breadwinner—those left behind must not only shoulder the debts but also have to manage ongoing living expenses that were previously taken care of by your income.
A Life Insurance policy gives you the peace of mind of knowing that your family will be taken care of financially if something happens to you. Upon your death, your chosen beneficiary or beneficiaries will receive a lump sum payment of your choice to help pay bills, clear debts and remove the stress of money worries from an already difficult time.
It seems reasonable to expect that you’ll be pretty healthy for most of your life, doesn’t it? After all, modern medicine is getting better and better, we’re making advances in medical technology every day and we’re living longer than ever before.
But statistics show that one-in-three people will suffer a trauma event in their lifetime, including stroke, heart attack, organ failure, multiple sclerosis, cancer and up to 65 other specified medical conditions. Not only can this affect your ability to work, it can leave you facing medical bills of tens of thousands of dollars – sometimes much more.
A Trauma policy will pay you a lump sum to help you pay those bills if you are diagnosed with any one of these conditions.
If you lost your sight, would you be able to keep working? What if you lost an arm or a leg? Worse still, what if someone runs a red light and knocks you down, or you fall off a ladder while cleaning the gutters and end up in a wheelchair? These are not pleasant thoughts and none of us expect to be so unlucky, yet it happens every day. The financial impact of this event can be enormous, as your entire future earning capacity has been removed.
And in the same way that we insure our cars but don’t expect to crash them, insure our home and contents without expecting to be broken into, and take out private health insurance without expecting to get sick, it’s worth thinking about how you would cope financially if this were to occur.
A Total and Permanent Disability policy will pay you a lump sum if it appears likely that you will never again be able to carry out the main income-producing duties of your job. Like a Life Insurance payout, this money can be used to clear your debts and provide an income stream for you and your family.