No Insurance? Why Take the Risk?

All / 17.03.2017

On average, only 25% of debilitating injuries occur at work or are work related

In 2013/14 there were approximately 531,800 work-related injuries in Australia. Of these, only around 298,000 received workers compensation.

Two-thirds of workers can expect to be off work for more than three months during their working life due to illness or injury.

Research conducted by Rice Warner in 2014 revealed that underinsurance in Income Protection cover costs the government $260,000,000 per year in providing income replacement benefits.

Who needs it?

Some people may not need cover. For instance, if you

  • are near retirement and would give up work if you were disabled;
  • have lots of sick, annual leave and long service leave to give you protection;
  • have access to adequate amounts of cash to rely on;
  • have a partner or other people who will support you.

Other people may just misunderstand. A common cause of confusion is to think you are covered by worker’s  compensation insurance. This, however, only covers accidents at or during work, or illness directly attributed to work.

If you are not aware of the cover available, read on!

Income protection insurance pays an income to you if you are unable to work due to an accident or illness. The income is usually 75% of your pre-disablement income and is payable after a “waiting period”. You choose the waiting period to suit your needs – for instance, if you had a lot of unused leave you could choose a longer period.

Income protection is particularly valuable for self-employed people, casual workers or anyone else who relies on their income but has no sick leave. You will be required to provide evidence of your usual income when taking out a policy.

The income will be paid until you recover and return to work or for a “benefit period” – this can be as short as one year or up to age 65. Some policies pay a rehabilitation benefit to help ease you back to work.

Income protection insurance premiums are tax deductible. Many people pay the premiums annually near the end of the financial year to bring forward the tax deduction. However, be aware that the income payments are taxable.

Premiums are generally based on your age, gender, occupation and previous medical conditions but you can save money by choosing a longer waiting period and a shorter benefit period. However, there is no point in having insurance that doesn’t pay out when you need it.

If you’re not sure of your specific needs, talk to your financial adviser who can recommend a solution to suit you. Why take the risk?

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

 

Disclaimer :Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.