What do you think is your biggest asset?

For a young person it may be your car, or perhaps your savings for a home deposit.  However there is one asset that will dwarf all other assets you have.  That is the present value of all your future income!

So what would happen if you lost it due to illness or injury?

How would you pay your rent, your car loan, your food bill etc and how can you protect against this risk?

APC Foundation Client Service is purpose built to help young people get their financial house in order.

Protecting your biggest Asset – Income Protection Insurance

If your largest financial asset is your ability to generate an income across your lifetime APC believes the protection of this asset is critical! Putting cover in place early also comes with many benefits!

So, what is income protection and what does it cover?

Income protection insurance covers you against loss of income whilst you are unable to work due to illness or injury. This can be a temporary or even a permanent period of disability. Income protection is used to help you and your family meet ongoing living expenses and debt or mortgage repayments.

It is also often called salary continuation insurance, particularly when offered inside your superannuation fund. The level of cover is set as a percentage of your income and will not normally exceed more than 80% of your usual income amount. In the event of a claim a policy is paid out to you as a monthly benefit.

Income protection insurance may be most suitable for anyone who cannot afford to be without their income.

Can you afford to have no income?

Benefits of income protection insurance

• Peace of mind that your income is securely protected
• Retain your lifestyle by replacing lost salary
• Protect your wealth by reducing or removing the need to sell assets to generate cash
• Premiums can be tax deductible
• You don’t have to ask Mum or Dad for help!

The Alternative

Without Income Protection insurance, you may need to run down savings, sell assets, and/or rely on family or Centrelink for assistance will occur. This will mean you may find it difficult to maintain your standard of living or pay for medical assistance you require.

Getting it right

As part of APC’s Foundation Client Service, a key pillar is to ensure our members have reviewed their Income Protection requirements and are adequately covered for an unforeseen catastrophe.

APC’s commission rebate policy (can be up to 30% of premiums) applies to members of the Foundation Client Service so we often find that our members out of pocket premiums are minimal as you will see from our example below;

Case Study

• Young professional – age 29 earning a salary of $90,000
• Income Protection Policy annual premium – $1000
• Less tax deduction for premiums paid – ($390)
• Less APC commission rebate – ($300)
• Net ‘out of pocket’ expense – $310 pa

As this example shows, the actual cost of the insurance is a small price to pay for the protection of your biggest asset!

If you would like to help your child protect their income ask any member of the APC Advice team and we’ll be happy to help.