The Unexpected Expenses of Losing Your Income

The Unexpected Expenses of Losing Your Income

A sudden and unexpected loss of income is a devastating blow for anyone to suffer, especially those with a family relying on their ability to pay the bills and put food on the table. But what can hurt just as much as the loss of income are the unexpected expenses that follow, that pile up and add insult to injury. Here’s how it can happen, and how to protect yourself and your loved ones.

The unexpected expenses

Losing your income can cause many more problems than you may think. Whilst the mind first brings about the obvious scenarios of no longer getting a pay check, it is the unexpected expenses that will take you by surprise, expenses that you would not have had to head to deal with pre-injury. 

You may need to pay for long term rehabilitation and physiotherapy to get you back on your feet. This does not come cheaply, and can be an ongoing commitment for years at huge expense. You may need to have a family member or spouse take time off work to care for you, taking yet another income away from you and your loved ones. Or you may need a registered nurse at home to aid you in your recovery which will leave you hurting in the hip pocket. 

Then there are other medical bills. Follow up surgical appointments, possible MRIs and X-rays, the cost of home modifications and maybe even a new car that you are able to operate, or a driver whilst you cannot. These costs all add up far too quickly and most often cannot be avoided. 

And if you are a business owner you will need to keep the business running whilst not being able to work it as you were. Not only will the shock of injury and onset of what could be a long recovery have its impact upon you, the stress of keeping a business alive can begin to wear you down even more.

Protect yourself with Income Protection Insurance

The good news is that you can protect yourself against these situations with income protection insurance. One simple product can help remove the risk of calamity for you and your family, and in the event of an unexpected accident causing the loss of your income, financial stress will not be among the issues that you face.

Tradecover WA offer a suite of products to protect you and your loved ones. We can tailor your income protection insurance on your age, sex, health, smoking preferences, occupation, and the time interval that you choose to wait before receiving a payout as well as benefit period. And it’s simple, but if and when needed, will be an advanced protection against hardship when you need a helping hand.

Protect yourself

Protecting yourself is easy, and all it takes is Income Protection Insurance. Call Tradecover WA today and set your mind at ease. You’ll sleep better knowing that if something tragic happens, you’ll still be putting food on the table. 

Top ways to compare Income Protection policies

The nature of life means that the unexpected can strike at any time, leaving you in a situation where you might be unable to work due to injury or illness. Income Protection Insurance will provide you with regular payments of up to 75% of your income until you’re able to return to work or until the benefit period expires. This means you’ll be able to keep up with payments while also maintaining your lifestyle.

But what should you look for in an Income Protection policy? We’ve included some helpful hints so you know what to consider and what your advisor is talking about when taking out Income Protection cover.

What do I need to look for?

When choosing Income Protection Insurance, consider the waiting period for the policy before you can claim. This is usually around 30 to 90 days. If you have a considerable amount of sick leave available, you may be happy with a policy that has a longer waiting period. However, if you don’t have access to a lot of leave, a shorter waiting period would be better so you can start receiving payments fairly quickly. This might be particularly important if you are self-employed.

You will also need to look at the length of time, known as the benefit period, which a particular Income Protection policy will continue to provide payments. All policies have limits and can vary from one or two years, or until 65 or 70 years of age depending on your occupation.  Check the benefit period and try to opt for the longest length of time that you can comfortably afford. This will give you peace of mind if you do find yourself unable to return to work indefinitely.  

The most common Income Protection insurance policies cover both accidents and sickness.  However you can opt to choose a policy focused only on protection if you have an accident.  This may be necessary if you are unable to obtain a policy to cover you for sickness due to a pre-existing condition or health issue. Or you may simply want to save money on premiums and only cover yourself for accident or sickness, not both. 

Before you sign up with Income Protection, consider how much you can afford to pay on premiums. You don’t want to be in a situation where you have the top level cover but are struggling to pay for your policy. Also, think about how much money you would need if you are unable to work and ensure your policy would cover this amount. Consider expenses such as mortgage, bills, vehicles and any other major costs. If you consider this before signing up, you won’t be caught short if you ever need to claim. You should also check that the payments are indexed to match inflation so that if you have a long term claim, the benefits increase each year along with inflation.

Making it easy

Choosing Income Protection insurance can be overwhelming at times and there are many factors you need to consider. At Perth-based Tradecover WA, we take out the guess work by helping you choose the right level of cover for your needs. We’ll take into account your personal circumstances to ensure you get the best fit with your Income Protection policy.

For information regarding Income Protection insurance, call us at Tradecover WA Financial Services and we will be more than happy to help.

Four vital reasons why you need Income Protection Insurance now

Having an income is great, it allows you the freedom to maintain the necessities in life, such as pay the bills, buy the groceries, look after family, and pay for your home or car. Without money coming in we put ourselves at risk of losing our assets and struggling to keep up with bills.  

If in the terrible event that you became ill or suffered from injury which prevented you from working, what would you do for money? 

Unfortunately, many Australians underestimate the value of income protection cover. The Financial Services Council of Australia tells us that only 33% have protection for their hard earned money! 

We often make sure we have insurance for our car, or home and the items inside, however we fail to insure what is actually paying to keep these things in our lives – our incomes. 

We have compiled four reasons why you need to add Income Protection Insurance to your policies now. 

1. Freely choose your level of Income Protection Cover

Income Protection Insurance means you have an ongoing replacement income over the time you are off work due to sickness or injury. This will help you soundly manage your finances and ensure that bills are paid for. 

The freedom of Income Protection Insurance allows you to make decisions regarding: 

• Your waiting period – the length of time you wait before you start accruing benefits.
• Your benefit period – you can choose periods of payment to extend to two, or five years, and even up to the age of 65.
• How much of your income you would like to insure – you can choose a smaller percentage or up to 75% of taxable income.
• You can choose an index-linked policy to keep up with inflation
• You can choose the frequency of payment, monthly, half yearly, or yearly. 
• You can choose if you would like an agreed upon policy, or an indemnity policy

Having this freedom means that you will be able to control to a degree the level of your Income Protection quote. 

2. Benefits can be set up as Agreed or Indemnity policies

You will have the choice between policies where the amount you agreed upon at the start of your policy is the amount which you are paid out for, or a policy where the amount you are currently earning is the amount your claim is based on.

An agreed-upon policy can suit those with a fluctuating income or those who are self-employed.  You will have to prove your income at the time of application for this type of policy. It will cover you regardless of your employment status, whether you took maternity leave, were off work, or worked part-time at any stage resulting in decreased income. 

The opposite style to agreed-upon Income Protection Insurance is an Indemnity-style.  This can be less expensive and you will be insured for the amount you say you earn. If you later make a claim you will need to prove your income at the time of the claim. The Indemnity style can usually suit those with a stable and predictable income and helps to save on their premium rates. 

3. You will be able to sustain yourself

Income Protection cover allows you to have a steady stream of income should you no longer be able to work.  You can work out a baseline for your expenses by asking yourself: 

• What are the costs of meeting your mortgage repayments or rent?
• Do you have any other debt repayments such as car or personal loans?
• Do you currently provide for your spouse, children, or other dependents as well?
• How will you maintain your assets and investments?
• What other bills do you need to pay such as phone, groceries, or utilities

A financial advisor will be able to inform you what other expenditures you might need to consider.

4. Income Protection Insurance premiums are tax deductable

Did you know that in most cases Income Protection Insurance is also tax-deductible?  You may be eligible to claim your Income Protection Insurance in your business tax return.  If you are unsure, it is best to seek advice from your financial advisor or accountant. 

You can speak to one of Trade Covers’ team members today regarding your income protection cover and competitive income protection quote.  We can help you choose the right level of cover by combining all of the above information about your expenditures, income, and benefit periods, with your age, sex, gender, health, and occupation.  

With the right planning you can save yourself from financial disaster.

Call (08) 9312 7955 today.