Sunday, 25 March 2012

Future proof your income

Working hours for Australians are getting longer, so ensure that all your hard work is not at risk.

The latest AMP.NATSEM Income and Wealth Report: Race against time – How Australians spend their time, released in November 2011, found that in the nine years following 1997, the amount of time Australians spend at work has increased from 15.4 per cent to 16.5 per cent.

In 1985, men working full time averaged 39.5 hours. Today it’s 42.3 hours, while for women the hours have risen from 36.4 to 38.6.

The task of balancing work and family contributed to the report finding that 40 per cent of women and 30 per cent of men are often or always pressed for time. This has an inevitable impact on work-life balance and makes many working parents feel guilty for the amount of time spent away from their children.

Obviously people are working harder than ever to support their families, but what many neglect is to future proof their income by taking out insurance. Not many people would be able to sustain their lifestyle and pay their bills if they were unable to work due to illness, accident or permanent disability.

Insurance can provide peace of mind that your hard work is protected through a number of policies which may provide you and those you love with a financial safety net in the event of sickness, disability or death. It can help your family to meet medical expenses, rehabilitation costs or, should the worst happen, give them the financial security to fund their lifestyle.

Income protection, also known as salary continuance, usually pays a monthly benefit of up to 75 per cent of your regular income if you’re sick or injured and can’t work. This can help you continue to make mortgage payments and cover other bills, such as school fees, utility and grocery bills.

Trauma cover can provide a lump sum payment if you’re diagnosed with a specified condition and can give you financial security during your recovery. The conditions covered can include heart attack, multiple sclerosis, cancers and stroke. This type of insurance cover may also be suitable for people with full-time home or carer duties, and for those wanting to maintain their financial independence – no matter what life throws at them.

Total and permanent disablement insurance provides a lump sum payment if you’re totally and permanently disabled. This cover will usually help you pay for medical expenses, repay major debts, pay for home alterations (i.e. to provide for disabled access) and ensure that you are looked after in the future.

Death cover may provide a lump sum payment if you die, or, under some policies, are diagnosed with a terminal illness. This cover can be valuable to anyone with large debts, such as a mortgage, regardless of age.

It makes sense to have the right cover to ensure your family will have financial support if you die or are unable to work. You can tailor your level of cover, benefit period, payment option and other plan options to suit your own circumstances.

For professional advice about which insurance option is most suitable for you and your family, talk to us.

What you need to know

This article contains general information only. It does not take into account your objectives, financial situation or needs. Please consider the appropriateness of the information in light of your personal circumstances. If you decide to purchase or vary a financial product, your financial planner, our practice, AMP Financial Planning and other companies within the AMP Group will receive fees and other benefits, which will be a percentage of the premium you pay and/or the advice fee you agree with us. Some of the information in this article is based on our interpretation of the law. It is a summary of the subject matter covered and is not intended to be comprehensive tax or financial advice. No reader should act on the basis of this article without obtaining specific professional advice. Further details are available from us, or AMP Financial Planning Pty Limited on telephone 1300 157 173.

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