Why Income Protection is so important regardless of your age

“I don’t need income insurance, I’m fit and healthy, and I will consider it when I’m older”.

We’ve all heard a friend or family member make this statement, maybe we’ve even made this statement ourselves. The notion that we will be off work for a considerable amount of time seems so far-fetched when we are in our 20’s and 30’s, in our 40’s we tell ourselves we are too busy to look at it and by the time we hit our 50’s we tell ourselves there’s no point.

However, injury or illness can occur at any time, and if we are not protected it can have serious ramifications on ourselves, partner, family and friends. The lifestyle we have become accustomed to can change in an instant. The pain, injury or illness might be hard to deal with, but it is as nothing compared to the regret felt by those that decided they were bulletproof or wouldn’t be affected by being forced to have a considerable amount of time off work.

A few years back, a friend of mine was in this exact situation. A healthy 23 year old who worked full time during the week and enjoyed taking the sporting field with mates on the weekend. They had played football all their life and expected this Saturday to be just like any other, however, as happens on the field every weekend they suffered a serious injury.

The result was a broken leg and a torn ACL, extremely serious injury which requires a lengthy recovery.

The first thing that went through his mind was “how bad it is, can I play next week”, from there as his understanding grew these thoughts turned to “how hard will this recovery be?”, “how long until I can walk again” and eventually, “how long will I be off work for and how will I survive”.

Work wasn’t the first thing that went through his mind and nor should it be after suffering a painful injury, however, as we rely on our income to live, it is easily the most important.

Our income doesn’t just give us the freedom to go out for nice lunches or socialise with our friends, it is the basis for everything we do, every day of our lives. I don’t need to tell those with a mortgage how important a regular income is, that payment is coming out at the end of the month whether you have been working or not.

He had been saving for a house for some time, it was a dream of his to buy and that hinged on a stable income. He works as a builders labourer and has been driving himself to work for the past 5 years, his income pays his registration, car insurance, puts petrol in his car, work clothes on his back and pays for his lunch.

As he did not have Income Protection, none of this became possible, he had managed to save up a bit of annual leave, 19 days, that went pretty quickly, his sick leave followed soon after and by the time he had been discharged from the hospital he had already dipped into his savings.

Even at that early stage, it became obvious he would be returning to work with no leave and far less in savings, meaning this lifestyle he enjoyed, was not only going to be affected during his recovery, but also during his first 12 months back at work.

In the end it took my friend 7 and a half months before he returned to full time work.

He had no savings, had not been out of the house in three months, his mother was forced to take considerable time off work, driving him to and from specialist check-ups, physiotherapy sessions, Centrelink and many other places.

It was at this point, he realised, the Income Protection is not just for him and an income to help out for a few months, it is for many other reasons: it’s for his family, so they don’t have to financially support him, it’s for his future, as now he will not be able to fulfil his 5 year dream of buying his own house for atleast two or three years, not to mention he won’t be having a holiday for a considerable amount of time as he builds his leave back up slowly.

As we get older, protecting our income only becomes more important as we take on a mortgage, get married, have children, need to pay for the running of a household and have a family dependant on your ability to bring home an income. Even as our kids get older we still need to put them through schooling, take them on holidays and help them out where we can. As a person in their 20’s or 30’s we can look for assistance from ouyr parents, but how about 20 years down the track, in our late 40’s or 50’s. Our parents are now retired after working 40 – 50 years of their life. Will you be comfortable asking them to forego their retirement plans, their life’s work, to help you out because you through “it won’t happen to me”? Again, we aren’t just risking our lifestyle, it is everyone around us too that is affected too.

If you think your family, or some Centrelink payments can help you get by, look at your current income and ask yourself if you could get by with a fraction of that, maybe 20-25%, not going to go too far is it!

If you are lucky enough to be approved for assistance from Centrelink, will you survive the weeks and weeks on end while they assess your application? In this instance, he did not survive.

While I said he didn’t return to full time work for over 7 months, the sad thing is, due to his financial situation, he was forced to go back one or two days a week far earlier than he should have. An Income Protection policy would have allowed him to focus on recovery and recuperation.

Your income and your health are your biggest assets and you need to protect them.

Ask yourself… “Will my current bank balance and 2-3 weeks of annual leave be able to support my lifestyle and my financial goals if I’m off work for months, maybe even years on end?”

When you think about it, we can’t afford not to have Income Protection, your lifestyle and your future are too valuable to risk.

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