Why Income Protection? We have ACC...

What are Kiwi’s Missing when it comes to protecting their income.

The average house prices Nationwide have skyrocketed past $1,000,000 so it’s a no brainer to insure your home. But what’s your income worth?

Say you’re 35, earning $75,000 a year, assuming no changes to your income over the rest of your working life (obviously there will be, just entertain me for a second) you would earn $2,250,000 by retirement at 65. Once again, it’s a no brainer to insure right? We didn’t even account for any salary increases over that time (and we should add those!).

The Financial Services Council published a report in 2018 stating that only 1 in 5 kiwis have any Income Insurance in place, and a large portion of those didn’t have a sufficient cover in place. Why are we getting this wrong?

Your ability to earn an income is the biggest contributor to achieving your financial goals. Don’t take my word for it I am yet to come across a financial expert publish advice on insurance and tell you that Income Protection is a waste of time. Go have a look, even the most mainstream, Barefoot, Mary Holm, go check them out and come back.

Common things I hear about income protection…

“We have ACC”, Please remember that ACC is the Accident Compensation Corporation. You are more likely to be unable to work long-term for events that do not involve accidents, like a critical illness which they do not cover.

“It’s too expensive”, I tend to agree but insurance premiums are likely much cheaper than Home Insurance, so it’s a matter of prioritisation and perspective.  

“Who can I trust to help?”, A big question and hard to answer. Find a financial adviser you can trust, speed-date a few, do your own research and see if they can answer your questions in ways that make sense to you. If you don’t understand them they aren’t the right fit.

It’s as simple as prioritising insuring the things you cannot afford to do without, income has to enter that equation.