If you have a career plan and everything is on track with your personal finances with a regular income, that is obviously good news.
Many of us have the ability to generate an income and build some wealth at varying levels but a good number of us simply rely on a regular wage to meet their financial targets and commitments and don’t have a backup plan in place to deal with a financial crisis if we are suddenly unable to work for a period of time.
Many hard-working Australians can be considered financially savvy and have a good understanding of finance and know how things like a mortgage and investing for wealth work.
The missing gap for some of these people is realization of the true financial impact that can be felt when your capacity to generate an income is suddenly and swiftly taken away from them on a temporary or long-term basis.
Financial planning needs to include drawing up legal documents that provide a clear indication of your wishes and estate planning to ensure that your family are looked after as best as possible, but it should also include making arrangements to protect your income if you suddenly become incapacitated.
Having life insurance is always a good thing and this will ensure that your family will receive a lump sum when you die to help them cope financially when you are no longer around.
Arranging life insurance is obviously a financially savvy thing to do and can provide the money your family need to pay off any debts like a mortgage and give them a lump sum to live on, but life insurance is only normally comes into force when you die or sometimes when you are diagnosed with a terminal illness.
Having life insurance will not help you if you fall ill and become unable to work for any period of time, so another life product that should also be considered as a safeguard against falling ill and being unable to generate an income is protection insurance.
When you arrange income protection cover, you are basically plugging a vital gap that is not covered by life insurance.
Income protection insurance will provide you with an income if you become unable to work as a result of an unexpected injury or illness. It may also cover you are diagnosed as suffering from a disease.
Not everyone is eligible to be protected by the Work Cover system and those that do qualify, are only covered for accidents that occur at the workplace. Having income protection will be able to provide you with that extra peace of mind, when you know that you have cover in place to deal with an unforeseen bump in the road that affects your financial earning capacity.
The other good news relating to income protection is that in many cases, it is also tax deductible.
Covering all the angles
In addition to income protection, you can also look at a number of other financial protection products that will help you to cover all the potential angles and allow you to feel more confident that your family can maintain the same lifestyle and financial stability, even if you are suddenly unable to work.
Mortgage protection insurance can be arranged so that the mortgage can be paid in a lump sum if you die or cover the repayments if you become incapacitated and unable to generate a regular income to cover the payments yourself.
There is also Trauma Insurance which specifically covers you in the event of a stroke, heart attack or cancer prevents you from working. There is also a product called Total Permanent Disability Insurance, which will provide you and your family with the money that you need in order to sustain the household.
When you sit down to evaluate your financial plans for the future, make sure that you don’t just think about wealth creation, but also think about how you can protect what you have built up with insurance.
Author Bio: Dylan Newbold is a insurance expert and researcher. A passionate writer, he enjoys helping people get the coverage that’s best for them by sharing information online. Look for his illuminating posts on a variety of legal and wealth management blog sites.