Insurance providing cover for personal income

How to Protect Your Greatest Asset?

What is Really Your Greatest Asset?

Insurance providing cover for personal incomeWhen people are asked about their greatest asset, they would typically have varying answers. Some would say it is their superannuation, investments, or even their property. While these things may indeed be considered assets, they are not necessarily the “greatest.”

Once you have thought about how you pay for your lifestyle, mortgage, bills, clothing, and more, it all goes back to one thing. Your money increases in your bank account, and you can purchase your wants and needs because you worked hard for it. Therefore, your best asset is your capacity to earn.

The Two Biggest Challenges to Your Asset

According to the latest WHO statistics in 2018, Australia’s life expectancy dramatically improved. From 82.50 to 82.90 (81 for males and 84.8 for females), Australians are ranked 6th when it comes to the longest living people in the world.

The average weekly earnings in the country were $1,604.90 by November 2018. This number was a 2.4% increase from 2017. Despite the decent income in Australia, some hindrances can affect a person’s ability to earn, and they are death and disability.

Based on the data from the World Health Rankings, the top three leading causes of death in the country are:

  • Coronary heart disease
  • Alzheimer’s disease or dementia
  • Stroke

Others include lung cancers and other cancers, as well as leukemia, diabetes mellitus, pneumonia, and kidney disease. Injury has always been a significant contributor to mortality in the country. Injury-related deaths often include suicide and falls, which are the 10th and 17th causes of deaths in Australia.

The Financial Challenge of Disability

Those who may have survived an accident, for example, cannot quickly go back to their previous jobs. Therefore, they go through a great deal of financial challenge, particularly those who become disabled after an accident. Most people who require hospitalisation are those who suffered from falls and vehicular accidents.

The Australian Network on Disability (AND) states that there are more than four million Australians who have some form of disability. This number translates to one in five people in the country.

The most common types of disability in Australia are:

  • People who need to use a wheelchair (4.4%)
  • Hearing loss (about 30,000 people)
  • Vision issues, such as poor vision and blindness (approximately 357,000 people)
  • Depression or anxiety (about three million Australians)

Many people in the country have a job despite their disability. However, those who can no longer work suffer from financial loss and most of them lose their job because of the health or mental state.

Protecting Your Greatest Asset with the Right Insurance

The chances of losing your ability to earn are much higher than you think. Whether you fear death or becoming disabled, you should always be ready for what can happen in the future. Illnesses and injuries can stop people from working, which can last for more than 90 days before reaching the age of 65.

An important question needs to be raised here. What will happen to you or your family if you meet this type of challenge? If you suffer from a disability or any health problem, will you be able to live off for a few months with your savings? While there are government programs that can aid in your unique situation, it is still essential that you can turn to your own financials if such an unfortunate time comes.

Thankfully, there are precautions that you can take to protect yourself in case of any misfortune. You may have insurance in place for your homeyour valuables, and your car. However, you should never forget about yourself – an entity that also needs to be insured.

Selecting which insurance policy is right for your circumstances

How to Choose the Right Insurance for Your Situation

With the appropriate insurance, you can reduce financial problems if your greatest asset is taken away from you. Here are the types of insurance that you should consider getting:

Income Protection Insurance

Whether you are a full-time or contracted worker, you will agree that the inability to work can be detrimental to your finances. This is where income protection insurance can help. It is a type of life insurance that gives disabled persons or those who are unable to work income.

The payment, which covers up to 75% part of the income, starts after a specific period. Typically, the choices include two years or five years and for individuals who are 60 or 65 years of age. This type of insurance is best for those who are single or those without dependents. If you have limited expenses that are fixed from month to month, for instance, income protection insurance will undoubtedly be useful for you.

Critical Illness Insurance

You may know this insurance as trauma insurance, which is its other name. Critical illness insurance gives you a lump sum if ever you can no longer work because of a serious illness, such as:

  • Cancer
  • Stroke
  • Heart attack
  • Coronary artery disease which needs bypass surgery

This insurance is ideal for those who need financial assistance for pocket costs, including lifestyle expenses and medical bills. If you need to relocate while you are under special medical care, for example, this insurance may be useful for you and your family.

Total and Permanent Disability Insurance

If you are completely or permanently disabled, you will receive a lump sum as financial assistance. Depending on how the insurance was defined for you, you can obtain the payment based on its type:

  1. Your occupation: If the coverage is defined to cover your own occupation, it will pay out according to your current profession.
  2. Any occupation: The insurance is designed to cover any occupation as long as you are qualified to it by experience and your educational background.
  3. Another type is non-occupational total and permanent disability in which the claimant should not be able to perform at least two of daily living activities, such as dressing and bathing.

Death Cover

You probably know this type of insurance as life cover or life insurance. It is considered one of the best ways to protect the financial future of your family. You will receive a lump sum payment in case you die, or you have a terminal illness in which death will possibly happen within 12 months.

Death cover insurance can provide your family with the financial assistance they require to pay for certain expenses, including mortgage, school fees, groceries, and bills. It may also be used to pay for funeral and living expenses as well.

To determine the insurance to get, you should consider the insurance cover you require based on your age, personal situation, and whether or not you have dependents.

The Insurance Dilemma of Australians

Underinsurance Report stated that about 95% of Australians did not have the right insurance coverage in 2010. Not much has changed after a few years. In 2015, Australians had ample coverage for their homes and cars. However, they seemed to neglect their earnings and lives.

Meanwhile, The Association of Superannuation Funds of Australia reported that 70% of life insurance was within superannuation. Despite the high percentage, the underinsurance level remains high. The average life cover level only meets 37% of the needs of individuals who have dependents or children.

We advise you not to wait until it is too late. You may not think about death or even an accident that can lead to disability, but it can happen to anyone, including yourself. Surveys have shown that more than half of the Australian population will not survive three months without having financial support through their jobs.

Insurance is extremely important, and you should have different types of coverage, including income protection and life insurance. It is not just essential that you have an insurance cover, but you should also choose a suitable amount that will cover the needs of your family.

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