Income Protection Insurance

Case History 1: Income Protection Insurance

Income Protection Insurance Case History 1

the following is an example of a Case History in relation to Income Protection Insurance. If you require advice regarding an Income Protection Insurance Policy, please contact us directly.

The Situation

Max and Lynette are married with three children. They have a mortgage of $230,000. Max earns $70,000 p.a. as a builder and Lynette works as a sales nursing assistant with a salary of $35,000 p.a. Their children go to private schools and all of Lynette’s income is allocated to covering school expenses.

Unfortunately, Max had a major vehicle accident on the way home from attending a mates funeral, and he is going to need around three months off work to fully recover. However, he will also permanently loose the use of his right arm, which will affect his ability to continue working as a builder. He has two weeks sick leave entitlement through his employer and limited cash reserves to pay medical and living expenses.

Going forward ... if Max cannot work as a Builder, what sort of work “could” he do? Think about that? What could he successfully “re-train” as, which would equate with his current life and lifestyle?

Truthfully, not a lot. So unfortunately they are looking at a dire situation in reality. Even if Max could be re-trained into a suitable job, who pays the living expenses for the whole family in the meantime?

Also, Lynette would probably need, or wish, to take time off work to care for her husband. Plus she would have the extra burden of doing the things he can no longer do.

Would her employment sustain this, or would she lose her job perhaps?

PRUDENT PRO-ACTIVE ACTION FOR THIS FAMILY would have been an Income Protection Policy:
The income protection insurance premium, which is tax deductible, could have covered Max and provided for up to 75% of his income up to age 65, ensuring a reasonable quality of life.

Without this cover, their entire lifestyle changes and basic living costs are pretty much non existent!!! This in turn affects not only current lifestyle, but planning for retirement.

THE COST? The family's current lifestyle, and beyond, could be insured for a cost roughly the equivalent of their house insurance policy.

IF YOU INSURE YOUR HOUSE, WHY DONT YOU INSURE YOUR INCOME?

DON’T REST EASILY IF THERE IS COVER WITHIN YOUR SUPER FUND because salary continuance through superannuation would have covered 75% of Max’s s salary for up to two years. But note that the cover in this scenario is only for TWO YEARS. What happens then?

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Further Inquiries

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DISCLAIMER

This web site does not provide financial or investment advice. The information herein is general material and does not take into account your personal and particular insurance, personal, or investment data or objectives or relevant needs. If we can assist with specific advice please contact us.