Protecting Your Largest Asset – Your Income – With Income Protection Insurance

PPI Solutions Video about Income Protection Insurance

Many people consider their largest asset to be their home. Actually your largest asset is your ability to earn an income.

Imaging if tomorrow you couldn’t earn an income. How would your lifestyle change if tomorrow you couldn’t work and provide for your family?

Many people don’t think about a life changing event happening to them, however, the risk of becoming disabled is far greater than you might think. As you age the risk of becoming disabled changes.

But what if you could reduce that risk and design a program to fit your needs? What if it cost only a portion of your weekly income to protect the rest of your annual income?

This is the promise of income protection insurance

Income protection insurance is designed to protect your income when you are too sick or injured to work.

Let’s look at your home again. You have insurance on your home. This year just 1 in 1200 homes will burn down. You also have insurance on your car, but the chances of destroying your car in a catastrophic crash are only 1 in 240.

You stand a much greater chance of becoming disabled and unable to work. The chances are 1 in 5! As you age the risk of becoming disabled increases.

Let’s assume you are 40 years old and planning on retiring at 65. During the next 25 years you have a 48% chance of suffering a disability lasting longer than 90 days. That’s almost 1 of every 2 working Canadians.

If you’re disabled for longer than 90 days there is an almost 60% chance you will be disabled for more than 5 years. If you’re no longer able to work, where will your income come from?

• Your savings
• RRSPs
• A line of credit

How long could you financially survive? Months? Weeks? Days!!

Your income is your largest asset – by far!

You can protect your income and insure your family’s future with income protection insurance.

Where do you start when planning for income protection insurance?

You need to ask yourself 2 questions:

1. How much money will you and your family need to maintain your current lifestyle?

• • For example, you’re age 40, earning $50,000 per year. By age 65, if your income increased by just 3% per year, you would earn $1,822,963 over the next 25 years.
  • This is a very large sum of money you would need to replace to maintain your current lifestyle and build your retirement fund.
  • If you have children, this income can be used to help fund their education.
  • You would use this income to go on family vacations.

1. Where’s the money going to come from?

• • Let’s look at some potential sources of income. If you saved 5% of your income each year for 10 years it would only take 6 months on disability to eliminate your entire savings.
  • What bank would you be able to borrow from? Would they consider lending you money when you are unable to work because of a disability?
  • Will you be able to pay your bills and maintain your lifestyle on one spouse’s income?
  • Would you be able to continue to save for your children’s education or your retirement?

You may be able to sell assets, but what if market conditions weren’t favourable? Would you be able to recover from this kind of a loss?

The most logical source of income during a period of disability is an income replacement plan, if you qualify. It’s a secure source of money in the event of a disability and it can fund liabilities that occur due to long term injuries or sickness.

The cost is extremely affordable. Typically, with a portion of your weekly income, you can fund the remainder of your annual income.

If you don’t have an income protection plan, there has never been a better time to start one.

Contact Life Guard Insurance today to get connected with an insurance advisor to design income protection insurance tailored to your specific needs.

The article was written by Mitch Reynolds+. If you found this article interesting or it made you think, please feel free to share your comments below. Liking us on Facebook, giving us a +1 on Google or Tweeting this article about income protection insurance would be very much appreciated.

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