How to protect income with lifestyle insurance

How to protect income with lifestyle insurance

There are few Australians who do not rely on their income to pay their mortgage and meet their essential day-to-day needs. For the majority that do rely on their salary or wages to provide for themselves and their families, protecting that source of income is vital.

Involuntary unemployment

It's an unfortunate fact of life that despite your ardent efforts and your employers' best intentions, becoming involuntarily unemployed is possible. Whether this occurs as the result of a corporate restructure, an employer becoming insolvent or perhaps a dismissal for some reason or another, it is a reality for Australians on a daily basis.

According to Australian Bureau of Statistics, as at October 2014, the unemployment rate for the country sits at 6.2 per cent. That's over three-quarters of a million people who are without a job, and most likely, without an income.

Protecting your income is a sure way to safeguard your lifestyle. If your pay cheque were to cease next week for an indefinite amount of time, it's not hard to imagine that a lot of the things you currently enjoy would have to be dispensed with.

If you have a partner or spouse whose income is also an important part of your weekly budget, you can take out a joint-cover policy that will insure both of your incomes. A family of four on a single income is not a pretty picture for most people, so this should be a serious consideration when thinking about your insurance options.
By taking out Lifestyle Insurance with, you are able to put something in place should the worst possible scenarios come to pass.

Inability to work

Of course, losing your job can be incredibly stressful and inconvenient, but losing your ability to work can be devastating. A total and permanent disability could not only cause you to lose your income, but could create major costs that your family will be unable to cover.

A lump sum payment from your Lifestyle Insurance would be an ideal way to prevent a situation like this, reducing stress and worry at a time that is incredibly difficult for any family.

Who should have income protection?

Almost every Australian who relies on their income for their daily needs and to sustain their lifestyle could benefit from income protection. However, some earners are more susceptible than others. If you work in an industry that has a high injury rate, protecting your income should be a top priority.

Others that could benefit from guaranteed income after losing a job or the ability to work would be earners with a lot of dependents, as well as the self employed. If you are the major or sole bread-winner in your household, your family in particular would benefit from this kind of cover.

For those that run their own business, contract to others or are self-employed - how would you support yourself if you lost your ability to work? For many entrepreneurs and owner-managers this is a major worry, as you are an integral and essential part of the money-making mechanism of your work. If you're not there, how would your business make money?

Protecting yourself from any of these eventualities should be a priority when planning your finances and insurance. Plenty of people consider insuring their assets against harm or destruction, but what about your ability to buy or maintain those assets? Car insurance is great, but if you can't meet the payments on your finance through loss of income, you may lose it anyway.

When it comes to protecting your greatest asset (that's you), make sure you talk to somebody in the industry who can point you in the right direction. Discuss your insurance options with your provider for finer detail.

Image credit: Jakub Krechowicz