Income protection insurance: It goes to work when you can’t
6 September 2021
Statistically, there is a one in three chance that, before you turn 65, you’ll have to stop working due to an accident or illness. Whether it’s a minor sports injury or glandular fever, do you know how would you manage financially if you became ill or suffered an injury and were unable to work for an extended period?
We take out insurance to protect our homes and cars in case the worst happens but, too often, we don’t stop to consider our most important asset – income. It’s our means of funding our mortgage, paying our bills and feeding our families, but what if it was suddenly taken away?
Dean McGuane, a self-employed carpenter from Colac, is all too familiar with the realities of this situation. A few years ago, Dean suffered a serious knee injury on the field during a local football match, which put his sporting pursuits, and professional livelihood, at great risk.
But Dean was one of the fortunate ones. Thanks to the income protection insurance he had been advised to take out prior to the accident, he avoided having his whole life turned upside down when he needed to take time off work to recover and was paid a monthly sum insured until he was fit to return to work.
Income protection insurance helps protect your income if you suffer an injury, illness or sickness and are under orders from your doctor to rest at home and not work. It is designed to pay you a benefit for an agreed period of time until you are able to return to work.
It works particularly effectively with critical illness or trauma insurance, which covers things such as cancer, heart attack and stroke. If you are to suffer an insurable event, your income protection can help pay your mortgage and everyday expenses, while critical illness swoops in to help ensure you get the best possible treatment to recover, wherever and whenever you need it.
Every working Australian has a one in three chance of becoming disabled for more than three months before reaching retirement age. And yet, only 33% of the Australian population has income protection cover. How long would you be able to survive on your current savings and sick leave?
The maximum disability pension with Centrelink is $868.30 per fortnight for singles or $1,309 for a couple. With the pension and energy supplements, this would increase the benefit payments for most people to $952.70 and $1,436.20 per fortnight respectively.
Would this be enough to support you or your family? Without adequate protection in place, you may end up needing to sell your assets, rely on the help of the community or crowdfunding, or get mum and dad to step in to look after you. All these propositions can most likely be avoided with appropriate income protection insurance.
When Dean had his accident, it was on the back of the local paper the next day. Because we’d discussed his high risk as a self-employed tradie who played football, we were able to swing into action on Monday morning to gather the information we needed to have his claim assessed and paid.
Whilst it didn’t necessarily help Dean with the pain he was experiencing physically and emotionally, it did take the stress of knowing how he was going to survive financially for the next few months away.
Let’s be honest, no one wants to think about these kinds of things happening to them but unfortunately, they do. As a financial adviser who is passionate about helping clients, and cares about them like they were my own family, I can help make sure you and your loved ones are protected when you need it most.
If you’d like to speak with one of our risk insurance experts to establish income protection cover or review your existing policy,contactus today.
 Interim Report of the Disability Committee, Institute of Actuaries of Australia, 2000
 Underinsurance in Australia, Rice Warner, 2017