What would happen if you couldn’t work for some reason and your income suddenly stopped?
As we approach the end of the financial year it’s a great time to consider income protection insurance as the premiums may be tax deductible.
You may want to check if you have income protection (also known as salary continuance) as a part of your super. Income protection premiums funded via super aren’t personally tax deductible.
Why is income protection important?
Your income is your biggest asset. Income protection is an essential component of your financial plan, replacing 70% of your income if you can’t work due to illness or injury.
Who is income protection suitable for?
Anyone who would need their income to continue if they were sick or injured and couldn’t work. It’s even more important if you:
- have debt, such as a mortgage that would need to be paid if you weren’t earning an income.
- have a partner and/or children that would need supporting if you couldn’t work.
- are self-employed and don’t have employer provided extended sick leave benefits.
Flexible payment options to suit your needs
You can generally pay your premium fortnightly or monthly to spread the cost over the year, or if you pay your premium as an annual amount towards the end of the financial year, you can effectively bring forward the expense, providing you with a tax deduction sooner. Your insurance provider will send you a tax statement to help you with this.
Income protection may not cost as much as you think
You can tailor your income protection cover to suit your needs. For a basic cover, it may cost less than your car insurance or your daily cup of coffee. It’s sad to think that many Australians may receive more money for their damaged car than for themselves after a major car accident if they don’t have income protection. Here are some indicative comparison costs:
