When it comes to protecting their assets most people will naturally think of their house? After all, with nowhere to live if disaster strikes, life can become very difficult. If the family home doesn’t immediately spring to mind when asked about what assets they protect, many people will instead think of their car; protecting their car is important because getting around via public transport can be much harder and far less convenient.
You are Your Greatest Financial Asset
While it is important to protect these two high-value assets against destruction, the last asset we tend to think about protecting is ourselves. Yet, when you stop to think about it, when you pay for your car and the mortgage on your home, if you were unable to earn an income it would make life intolerable.
Leigh Johnston, a Financial Planner with Vision Property & Finance, says it is the number one question everyone of working age should answer.
“As a Financial Planner, I like to ask my clients what they believe their greatest financial asset is. More often than not, the client will reply, ‘My house’ or ‘My car’. They certainly are very valuable assets, and in today’s world, it is hard to imagine life without them. But, surprisingly these assets are not the most valuable asset people have. Your most valuable asset is yourself!!”
Your Ability to Earn an Income is Your Greatest Asset
Research published by the Australian Housing and Urban Research Institute in March 2010 paints a very stark picture. They found that 83% of Australian car owners insured their car, but only 31% insured their income. Leigh says many people don’t see the danger ahead of them.
“So what happens if you become ill or experience a disability that prevents you from working? Most of us are not fortunate enough to have unlimited sick leave or significant savings to tide us over whilst we recover.”
Leigh says, according to a research paper published by insurance group Zurich in 2014, the Zurich Misinsurance Whitepaper, 38% of working Australians could survive less than a month without an income before having to sell assets.
“For a Financial Planner entrusted with giving people sound financial advice about how to best equip themselves for the future, It is very confronting to realise most people have never really been educated in this area. Collectively, many of us are flying totally blind when it comes to protecting our capacity to generate an income.”
Recent disability research, Leigh says shows that 60% of Australians will experience disability for more than one month throughout their working life and 25% will be disabled for more than three months.
Peace of Mind with Income Protection
It is possible for people to get help to protect their future income. Leigh says it is not difficult to get started and less costly than many may think. The peace-of-mind alone, she says, is priceless.
“To provide peace-of-mind you can protect your Income through insurance cover, for which the Government may provide incentives through income tax deductions for self –insuring. Income Protection insurance can provide coverage of up to 75% of your gross income, which will assist in meeting your financial commitments and protecting your assets and lifestyle, in the event you need to claim due to sickness or disability.”
Of course, no one expects to have any problems throughout their lifetime. Tragedy often hits when we least expect it. As Leigh demonstrates, even a minor break from work due to illness or injury can have a major impact on your finances. Income Protection insurance can help to bridge the financial gap when the unexpected becomes a reality.
If you are interested in discussing your insurance needs further, please contact Leigh Johnston at Vision Property & Finance on 02 4014 1999.
Leigh Johnston is a representative of FNP Solutions Pty Ltd (ABN 87 156 409 531) Trading as Vision Property & Finance Newcastle a Corporate Authorised Representative of PATRON Financial Services Pty Ltd ABN 12 122 381 908 AFSL 307379.