Lost income & losing your income

John (38) earns $64,000 p.a. as a Legal Clerk. Together with his wife, Barbara, and their two children, John was enjoying a week's holiday at the snow.

While an accomplished skier, John hadn't considered the crowds of beginners on the slopes, in particular one new snow border that crashed into John, sending him rolling down a black run! The combination of two broken ribs, a fractured pelvis and a punctured lung, extended John's one week holiday to four months sick leave.

And, because the accident hadn't happened at work, Workers Compensation didn't cover him. Luckily, John and Barbara had spoken to their financial adviser 12 months earlier, who'd recommended that the couple take out a comprehensive Income Protection Insurance policy. Not only did this give them financial protection, John was also able to claim a tax deduction on her policy premiums.

Once his two weeks sick leave had been used up, John's policy provided the equivalent of 75% of his monthly income for the remaining 13 weeks he couldn't work. Despite the lost income, the benefit payment allowed the couple to keep up with their mortgage repayments without having to dip into their savings, or consider re-mortgaging.

It could happen to you - you need income protection too!

Each year more than 1 million Australians experience serious injury or illness, which either requires hospitalisation or prevents them from working.
Source: Australian Bureau of Statistics National Health Survey - Summary of Results, 2004-05.

Think over income protection

Worker's compensation will look after you
If you were to suffer a serious accident and couldn't work, it's not uncommon to think that workers compensation will take up where your pay slip stopped. However, the fact is the majority of serious accidents actually happen outside the workplace*. And depending on your lifestyle, the amount paid may not be enough.
*Australian Bureau of Statistics, National Health Survey: Injuries, Australia, 2001.

Private Health insurance is all you need
Private health insurance is great when it comes to helping pay the medical bills, but what about your mortgage repayments and other costs of living?

Insurance in your super is enough
Most superannuation plans offer some insurance cover. But it may only be cover for death or total and permanent disability. If you need financial assistance while you're recovering from an illness or injury, you'll need to count on more than your super.

The Social Security allowance will cover you if you're too sick to work
If you are unable to work because of sickness or illness, remember that Centrelink benefits are assets and means tested. So depending on your own personal assets and other income, funding for your lifestyle may fall short.

Even if you are successful in meeting the strict eligibility requirements of the Sickness Allowance* or Disability Support Pension*, you can only receive up to a maximum of $456.80 per fortnight.

* Income and Assets Test and other eligibility criteria apply.
Centrelink online information, (myaccount.centrelink.gov.au) as at 02/04/08.

Find out more about income protection

If you need money to cover your income during extended leave from work due to sickness or injury, you can bridge the gap with Income Protection Insurance. The funds from income protection can help pay your mortgage, bills and living expenses due to lost income. Contact xLife to find more or to receive free income protection quotes.

Exclusive Offer! Call xLife on 1300 135 205 today and
save up to 20% on your first year's income protection premium.

April 2011