It’s Monday morning and I’m off to work…again. Lucky me!
No, I’m not joking. This is what all working people should be thinking as we hit the snooze button at the crack of dawn and battle the traffic to work.
Why? Because our income is our most valuable asset. If you had to stop working due to an injury or illness the Government’s safety net would catch you, but only just.
ACC would reimburse you 80% of your income if you were injured but you might not be so lucky if you had to stop working due to illness.
Let’s just ask ourselves, how long could I continue to pay my mortgage if my income stopped today?
Even if you could keep your mortgage repayments up for three months, you might want to consider taking out mortgage protection insurance and income protection insurance.
Consider this: according to actuaries (professionals who calculate financial values associated with uncertain events subject to risk, such as insurance premiums) all too many Kiwis are three weeks away from financial disaster - 40% of Kiwi men and 60% of Kiwi women are likely to take 30 to 90 days off work due to an illness or injury before they turn 65.
ACC might cover most of your salary if it’s an accident but if you are ill you could get a sickness benefit which would be $320 a week for a family or $262 for a single person. You may also qualify for an Accommodation Supplement and a Disability Allowance.
While this may be just enough to get by day to day it would be a struggle, especially if you are paying a mortgage. Unless you have a very healthy savings account or enough assets that can be made available when necessary, insurance is vital.
The latest research from the Financial Services Council found many consumers would not know how to manage financial risks if they arose. In the survey 43 percent of the respondents said “I’m not really sure how I should manage these potential impacts” whereas 25 percent said they did know how to manage them, and 28 percent said they were neutral.
Mortgage and income protection insurance covers your mortgage payments and a portion of your entire income if you have an accident or become ill.
The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz