Income protection, or mortgage protection, will protect your largest asset - your ability to earn throughout your adult life. Our income is our greatest asset! If you’re in any doubt about that just multiply your current annual earnings by the number of years you expect to continue working. An income of $50,000 over the next 35 years will provide $1.75 million, and so when we’re looking at protecting that precious ability to earn, this is the risk that you’re looking to insure.
Currently if you lose your ability to earn as a result of an accident, ACC or Accident Compensation will provide you a benefit equivalent to 80% of your income at the time of claim. If you lose your income as a result of illness, the compensation is a sickness benefit which is much smaller.
So, to ensure that we are certain of a benefit regardless of what government ACC or sickness benefits provide and for how long, we can insure up to 75% of our earnings and frequently this is done as part of an insurance protection package. There are a number of options with respect to the period over which the benefit will be paid, or the waiting period after a claim is accepted but before it starts to be paid.
It has been said that income protection insurance can be a significant cost and whilst that may be so, there are a number of ways we can reduce the premium commitment. One of these ways is to just insure our regular mortgage instalment through Mortgage Repayment Insurance. If we know our mortgage instalment can be provided for, perhaps the other income or benefits available to us might be sufficient to meet other living expenses.
As with life insurance or other forms of protection cover, our insurance company will want to know our age, occupation, activities or hobbies and of course our health history. As the insurance application can ask a number of questions which might seem daunting, Thompson McNeill will provide advice and guide you through the application process to ensure your greatest asset or your ability to earn income is protected.