Ok, we hear you! Where is the love for you fellas? Well, this issue is for the men out there and we want to talk about cars…. in a round-about way. Have you ever thought about how much you earn? Not in a year or next year but over your lifetime? If you started work at, let’s say age 22 after university, and your first year’s pay packet was around $40,000.
Assuming an annual pay increase of only 3% (CPI), do you realise that you would have received over $3.4 million in salary by retirement at age 65 (43 years) with your final salary around $138,000 per annum.
If you work it out, that’s about 141 Mazda 3s, or 97 Ford Falcon Utes, 68 VE Holden Commodores SS, or 5.7 Ferrari 458 Spiders, or even 1 Bugatti Veyron. Whether you have multiple cars or just one, I bet you have insurance on that little baby. So if you have insurance on your one Holden, then why wouldn’t you insure all 68 of them if you had them?
If you think about it, at the moment you’re probably paying around $800 per annum to insure your car worth about $40,000. That’s 2% of the value of the car and the maximum you would only get paid out is the same as one year’s income (using the example above). So why haven’t you got income protection in place? If something happened to you, you could lose your ability to earn an income (in this example $3.4 million), not just the value of your car.
Income Protection insurance is designed to pay a monthly benefit of up to 75% of your income if you were unable to work due to sickness or accident. It provides protection for you 24 hours a day, 365 days a year anywhere in the world. This allows you to concentrate on getting your health back on track and allows your financial obligations to be taken care of.
Ladies, income protection is not only for the men, if you had 188 Holden Barina’s you would insure them.
Lets get down to the facts
When you think about it, we insure our cars which are worth significantly less than our income and most don’t have cover for their income. Let’s look at some figures. Assuming you continued to work to age 65 and calculating in only a 3% pa pay increase
How Many Cars Can I Buy?
We all take it as a given that when you buy a car, you get insurance – even before you drive it away. So why don’t we think that when we get a job? New job – Do I have the income from this shinny new job insured?
Our ability to earn an income is our biggest asset and yet according to the Australian Bureau of Statistics, less than 10% of the working population has income protection. In a world where we have buses, trams, trains, taxis or even our own two feet to get us around, we are more concerned with insuring our transportation than our income.
How Does Income Protection Insurance Work
Insurance is the same whether we’re talking cars or income: you pay a regular amount now so that if something happens in the future you’ll have access to money to assist with your situation.
Income Protection Insurance provides a monthly benefit of up to 75% of your income if you are unable to work due to a sickness or accident. Payments will continue to be paid until you are fit to return to work (should you only be able to work on part time, then the payments will continue on a pro-rata basis) or until the benefit period expires, which could be 1, 2, 5, 6 years or to ages 60, 65, or in some cases 70.
Income Protection provides protection for you 24 hours a day 365 days a year anywhere in the world unlike WorkCover that only covers you for accidents that occur during work hours.
Is it for me?
The simple answer here is, if you’re earning an income, is yes! But if you want further proof, then all you have to do is look at the statistics.
The Australian Bureau of Statistics (ABS) found that 3 in every 4 Australians will be diagnosed with a serious illness during their working life and 1 in 3 Australian males will be diagnosed with cancer before the age of 75. Research done by The National Stroke Foundation shows that there is a stroke in Australia every 10 minutes, that’s 60,000 strokes per year.
With all these health issues and risks, it just goes to show how important it is to have insurance on your income so that if you are unable to work, you’ll have your financial obligations covered.
Can I afford it?
People often say “I can’t afford insurance” but to that we say, “then how can you not afford to get income protection”. If you don’t have any spare funds after you receive your pay packet and pay out your bills, then how would you pay these bills if something happened and that pay packet stopped. I know I’d rather pay out a little extra each month to ensure money kept coming in, rather than have to deal with the financial stress if my income just stopped.
The options and benefits within an Income Protection policy can be tailored to both your needs and your cashflow so that it is affordable. When you look at what your covering (millions of dollars) premiums are minimal. And income protection premiums should be tax-deductible but as we’re not Accountants you should consult your Tax Professional for confirmation on the deductibility.
If you want actual figures, a 35 non-smoker male working in an admin role with a benefit amount of $5,000 per month, benefit period to age 65 and a 30 day waiting period would pay (stepped premiums) anywhere from about $42 per month for a basic (Indemnity) policy to $150 per month for the most comprehensive (agreed) policy.
One last thing to ponder – ‘People insure their car just in-case it is damaged in an accident – but who will be driving the car?’
General Advice Warning
The Information on this page has not taken into account your financial situation, needs or objectives. Before acting upon any advice, you should consider whether it is appropriate for you.