How long can you afford to live without draining your savings?

Guest Blog by Hannah Waller, Hood Sweeney

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The only things certain in life are death and taxes…

You insure everything ranging from your home and your pets to a holiday, but have you ever looked at personal insurance? It could be the one thing that allows you to keep your home and protect your family should you no longer be able to work. Your greatest asset is your ability to earn an income and it is time to think about protecting yourself.

Income Protection insurance can protect you and your family financially by providing a replacement income of up to 75% of your salary should you become sick or injured and unable to work. This can provide you with the time to recover without the stress of mounting debt.

We’ve put together some things that you need to consider:

1. How long could you afford to live without draining your savings?

You wouldn’t drive a car without insurance, or live in a home without home and contents insurance. So why wouldn’t you insure your income when it funds all aspects of your lifestyle?

If you were unable to work, how long could you afford to live without draining your savings?

The truth is most working Australians under 35 would need to start living on credit, selling some assets or relying heavily on family after only one month.

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For example:

A 30 year old female can insure her car for $50,000 costing her $160.00 per month. This will provide her a one off payment of $50,000.

OR

A 30 year old female accountant can insure her $100,000 salary for $80.00 per month, less than a cup of coffee a day ($50.00 after tax). Providing her with a monthly benefit of $6,250 for as long as she is totally disabled or to age 65. With a potential total income payment of over $2,600,000.

2. What types of personal insurance are available?

▪ Income Protection – Will provide a monthly benefit of up to 75% of your income should you be unable to work due to illness or injury. Should you return to work in a partial capacity you may still be entitled to a reduced benefit.

▪ Death and Total & Permanent Disablement cover – Provides a pre-determined lump sum should you become terminally ill, prematurely pass away or become totally and permanently disabled. The level of cover can assist with clearing debt and providing an ongoing income including school fees to your family.

▪ Trauma – Will provide a pre-determined lump sum benefit should you become diagnosed with a listed critical condition. It covers conditions such as cancer, heart attack and stroke. A partial benefit may be available for early stage diagnosis.

3. What if I am a stay-at-home parent?

Many people underestimate the value of a stay-at-home parent. They traditionally work almost 97 hours a week. This can be broken into a few categories (we are sure there are many more):

1. Chef

2. Day-care

3. Housekeeper

4. Laundry

Replacing the everyday services that you provide can be costly, especially when it comes to cleaning and childcare. A survey conducted by Salary.com estimates that stay-at-home parents should be charging $115,000 per annum for their work…if only.

Many people assume because they aren’t earning a salary that they aren’t eligible for insurance.

Death, Total & Permanent Disability and Trauma insurance provides a pre-determined lump sum upon premature death, total and permanent disablement or diagnosis of a listed critical illness. This can assist in providing your family with some breathing space and the ability to maintain your existing lifestyle.

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4. What can you do today?

Many people feel that personal insurance is an unnecessary luxury, but an insurance policy can be tailored to suit your lifestyle and budget.

Contact Hannah Waller, Authorised Representative 1236572 of Hood Sweeney Securities Pty Ltd AFSL 220897 for more information on personal insurance on 1300 764 200 or hannah.waller@hoodsweeney.com.au.

This content is sponsored by Hood Sweeney Securities Pty Ltd.

Disclaimer:  

Information contained in this article is of a general nature only and does not constitute personal financial or taxation advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this article you should consider the appropriateness of the information with regards to your objectives, financial situation and needs. It is recommended specific financial advice be sought in relation to matters referred.

The information in this document has been derived from sources we believed to be reliable and accurate. Subject to law, neither Hood Sweeney Accounting & Business Advisory ABN 30 007 696 595, AFS License No. 485569 or Hood Sweeney Securities ABN 40 081 455 165, AFS License No. 220897, nor their directors, employees, agents, representatives or Authorised Representatives gives any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting, on the basis of the information contained in this article.

 

:: Sponsored by Hood Sweeney ::

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