The importance of income protection

If there is one thing I have learned over the years in this industry it is that nobody thinks they will ever use the insurance in their super. For the most part, even those that have taken the time to do the sums on how much cover they may need ‘just in case’ still expect that they will never actually have to use it.

Insurance isn’t something enjoyable to talk about over the breakfast table. To be fair, it isn’t an uplifting conversation to have at any time of the day. So I feel I should warn you now – this is going to be one of those chats.

If I asked you to name someone you know that has been diagnosed with cancer, chances are you could rattle off a long list of people. Personally, I can name at least ten people, including my husband.

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In 2016, it was estimated that 130,466 new cases of cancer were diagnosed in Australia. Even scarier still is that the risk of a person being diagnosed with cancer by their 85th birthday is 1 out of every in 2 Australians.

The incidence of diagnosis is increasing, but at the same time survival rates, have improved.

With over 10 years working in super, I’ve reviewed countless insurance claims. We are now seeing many cases of people being diagnosed with cancer, more than I anecdotally remember in the past. These people are taking time out of the work force to undertake treatment, and then returning to part time or full time work when they are well again.

My husband is one of these people. He was diagnosed with testicular cancer in 2015. We were lucky the cancer was found before it became too serious. The treatment plan was relatively short – surgery and a short dose of chemotherapy.

He was off work for less than two months, and his time off was paid under sick leave entitlements, but had his treatment taken longer, we may have found ourselves in financial difficulties.

Most people with superannuation are given insurance that provides a benefit in the event of their death or permanent incapacity. But most people do not have insurance to cover them if they become very sick but will (one day) be able to work again.

Imagine for a moment that you have just been told you have cancer. The survival rates are in your favour, but treatment will take at least six months. Treatment is invasive and exhausting. All of your energy will be used fighting to get better. The last thing you want to be thinking about is how to pay your bills.

Once feature offered by most super funds is a type of insurance that could cover you in this instance. Income protection is a type of insurance that benefits a person if they become incapacitated in some way and can’t work for a period of time. For example, if you were diagnosed with cancer and need treatment. Income protection policies usually cover about 75% of a person’s wages for a set period of time, depending on the policy.

Income protection has saved a lot of stress and hardship for many people suffering from a temporary disease. While I always suggest someone speak to a financial adviser, it’s good to know at least what insurance policies are available.

You can learn more about what we offer under Australian Ethical’s Insurance guide.

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