If we were to ask you to name your most valuable asset, what would it be? For many people their answer would be their home. Others may suggest that their boats or cars were the most important items . But what if we were to tell you that you may have something worth a lot more, that you may not have even considered insuring?
Around 45% of employed 18-64 year olds consider their home is their most valuable asset and only 24% would consider their lifetime income. However when told that an income of $50,000 per annum over 40 years equals $2million, the figures reverse with 46% stating that lifetime income becomes most valuable with only 29% sticking with their home as the answer for most valuable asset.
Given the potential earning figures it seems strange that people are happy to insure their homes, cars and contents, but not their incomes. Many people hold the mistaken belief that should they be unable to wotk for whatever reason, that ACC will cover their income. Unfortunately, this is not the case, as ACC is designed to pay out only on injuries (Or Accidents as the name would suggest!). Yet you are 2.2 times more likely to have someone close to you unable to work for six months or more due to contracting an illness rather than as the result of an accident.
But what sort of Income Protection cover do you need to replace any lost income?
Disability Income protection Insurance comes in a number of various forms and the most relevant cover will depend on the nature of your employment, whether you are self-employed or an employee or if you are in a higher risk employment category. Even the most straight forward Income protection cover has variations in whether you choose an agreed value for the sum to be paid while you are unable to work or have a cover based on your income at the time of incapacity. Then the premium pricing can be varied, by decisions around how long you wait before starting to receive payment, with waiting periods varying from 4 weeks to 2 years after the event.
For some people, the cost of additional Insurance to cover their loss of income is hard to justify, but you and your family can still have some income insurance to provide funds to cover your cost of living with some alternative type products.
Mortgage Protection cover provides an amount to cover the cost for what in a lot of cases is the largest single household expense. In fact with many providers the Mortgage protection cover amount can be slightly higher than your current mortgage repayments to allow for any increases in interest rates. There is also another option for a reduced level of Disability Income cover, which is for Essential disability. This covers a smaller amount of conditions but does cover the main reasons that the majority of people are unable to carry out their normal work.
There are a number of factors that can affect the level and type of cover to protect your most valuable asset. Contact your registered Insurance adviser in order to discuss what are the best options for YOU.
