Did you know that income protection insurance pays up to 75% of your monthly income if you cannot work due to illness or injury? It’s one of the best protections you can have if you’re currently working, especially if you have a family or dependents. However, it’s easy to brush this off as a concern for “other people” – you’re healthy, active and never get sick.

At Moksh, we think differently. As young professionals ourselves, we think these are the five key questions anyone working at the moment should ask themselves, when trying to understand if income protection is for them.

1. What is Your Greatest Asset?

If your answer is your house, your car, or any other personal possessions, you are sadly mistaken. These assets rarely produce any income, and in many cases, actually depreciate over time. 

If you are one of the lucky 8% of Australians that own one or two investment properties – congratulations! However, any positive cash flow derived from these properties is still unlikely to cover your monthly household expenditure.

Generally, the greatest asset the average Australian possesses, is their income-earning capability. Which means your personal health and wellbeing should be your number one priority, as your ability to earn a regular salary has the biggest impact on your long term cash flow.

2. How Many Sources of Income Do You Have?

Is your salary your only source of income? 

If you have other sources of income – will they be enough to cover your monthly bills should you be unable to work at your main job? 

Not having multiple income streams that can easily replace your salary will affect your ability to pay your monthly household bills. 

In the worst case scenario where you lose your job or are unable to work for an extended period of time, it’s prudent to think of how you will continue to pay your monthly household bills and support any dependents. Having multiple income streams that can replace your salary is one option. Income protection cover is another – and a much easier “set and forget” option.

3. How Long Could You Live Off Your Savings?

Typically, households should have a minimum of three months worth of salary saved up for a rainy day. Do you?

If this doesn’t seem possible – what’s your plan to pay your monthly bills if you are unable to work and earn your regular salary?

As we all know, life is surprisingly expensive. Even if you do have that three month savings buffer, that could deplete quickly, especially if you’re incurring medical bills at the same time. 

Call us prudent here at Moksh, but we like to sleep easy. Having a safety net greater than your bank balance for $20x/week means less pressure to build our savings now. It also means more peace of mind that you and your family are financially covered if you do fall ill or get injured.

4. But I Don’t Have Any Health Risks?

We’re currently in the prime in our life – does that mean we’re immune to major health risks? The simple answer is NO, nobody is! 

Health is considered by insurers to go beyond physical health. And as we can see below, in 2019, the single largest claim type across the major Australian insurers on average was due to mental health. This is a concerning emerging trend which should not be taken lightly.

Main health conditions in 2019 that resulted in people being unable to work and claiming income protection

1 Source: https://www.insurancewatch.com.au/insurance-claims-statistics.html

Some quick stats to put mental health risk into perspective:

• Mental health conditions are the largest single cause of disability in Australia, accounting for 24% of non-fatal diseases.

• 1 in 5 Australian adults will be affected by a mental health condition every year, with 1 in 12 Australian adults experiencing more than one mental health condition at the same time.

• 45%of Australians will experience a mental health condition in their lifetime.

Work burnout is real and often creeps up on you. Income protection cover means you have a fallback if the stress gets too much.

5. So, How Do I Protect My Greatest Asset?

Deciding the appropriate income protection cover for you starts with a thorough needs analysis. There’s no reason to overpay for cover or over insure. 

We’ve created a quick, no-commitment, quiz to help you assess the amount of cover you need and access free quotes. You can also contact us for a free 15 min consultation at any time – we understand these are big picture ideas at play and thinking about insurance can get intimidating. 

Protecting yourself and your family shouldn’t be difficult. That’s why at Moksh, we put your interests first.