Creating and protecting your wealth

What Would Happen If your Income Stopped?



Most people have '2' remuneration options... they just don't know it!


Insuring your house, furniture, contents and car is almost second nature to the majority of Australians. Yet all too often they fail to adequately protect what is probably their most important asset, their ability to produce an income. Income to provide the working capital that everything else relies upon. If you lost your capacity to work due to illness or an accident, would you have the means to continue to fund your daily life and meet any loan repayments? And if you were disabled for a lengthy period of time, what do you think would be the chances of meeting your long-term financial goals?


The risk is real


There are over 2.6 million people under 65 years of age in Australia with a disability potentially impacting on their ability to work. That's 10 per cent of the population. (1)


Every working Australian has a one in three chance of becoming disabled for more than three months before reaching retirement age. (2)


This is one risk that shouldn't be treated lightly.



  1. " Australia's Welfare 2007" Australian Institute of Health and Welfare 2008 
  2. Calculations based on data from the Institute of Actuaries of Australia 2000. Interim Report of the Disability. IA Aust: Sydney



It is a common myth that "Workers' Compensation will cover me".


Workers' Compensation will only cover you for accidents or injuries that occur during working hours or for an illness that is a direct result of your employment. And if your illness or injury is covered by workers' compensation be aware that the benefit is capped under the different state regulations.



Your Options...


Option 1 - The standard remuneration position

100 per cent of your income is received while you are well and able to work.
When you're disabled and can't work, other than sick leave, you get '0' per cent of your income.


Option 2 - The alternate remuneration position

Depending on your personal situation, you effectively receive around 98 per cent* of your income while you are well and able to work.
When you're disabled, after your waiting period you get paid up to 75%* of your normal income.



So what enables Option 2?

The availability of Income Replacement Insurance that delivers benefits in the event of personal illness or injury.


What makes Income Replacement insurance even more cost effective?

The fact that premiums for this cover are generally tax deductible, irrespective of whether you are an employee or self-employed.



Does that surprise you?


If I choose Option 2 how will my personal situation affect the percentage of income I receive?


Your premium and benefits will be impacted by the following:

  1. Your occupation
  2. Your health, age and gender
  3. The waiting period you decide on 
  4. T he benefit period you choose.


What choice will you make?


Advantages of Option 2

  • The things you have worked so hard to accumulate are better protected should you suffer an illness or injury and are no longer able to work.
  • Your dependants are rest assured their living essentials have been secured should an illness or injury impact your ability to earn an income.
  • If you do suffer an illness or injury you can spend more time recovering and less time worrying about your finances. The premiums are tax deductible.


Disadvantages of Option 2

You'll spend around 2 per cent of your annual income on the premiums for Income Replacement Insurance when you are well, to get up to 75 per cent of your income when you are not.


This is a small sacrifice for what is potentially an enormous benefit to you and your family.


It makes sense, so what's your next step?
SME Financial Services' Risk Adviser can assist you to understand your protection needs and the real cost for you personally. Together, you can create a plan to suit your individual circumstances. Contact us.
The information on this page is for general information only. For personal advice you need to speak with an SME Financial Services Risk Advisor.


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