When it comes to insurance, you probably have most of your assets protected. Your house, your car, and your possessions.
That’s great. It would be horrible to have to do without those things.
But there is one very important asset that most people do not have insured.
Let’s look at what that asset is, how you can protect it and what you should look out for in your protection.
Which Asset Should You Be Protecting The Most?
Let me ask you, what percentage of your income are you dedicating towards your retirement?
Probably around 6-10% right? With the combined effort of your own and your employer’s Kiwisaver contributions.
One more question… how much are you dedicating towards securing your income now?
If you are like most people, then the answer is probably nothing. You are putting aside for your retirement now, which is great. It is always best to be prepared. But how prepared are you for the here and now?
What if something were to happen and you could not earn? Not only would you be unable to make your Kiwisaver contributions, but you might not be able to pay your bills or your mortgage either.
If I asked you to rank your 4 key assets in order of importance (home, contents, car, and income), it is safe to say that your income would be near the top of the list. But more often than not, it is the only asset on the list without protection.
That is a big risk when you are investing around 3.9% of your income into protecting your home, car and contents.
So, how can you protect it?
How Can You Protect Your Income?
There is a perception that Income Replacement policies are expensive and not worth having. But if you are dedicating at least 6% of your earnings to Kiwisaver to safeguard your future retirement, should you not be protecting your current lifestyle as well?
Income Protection and Mortgage Protection insurances both fall under the banner of Income Replacement policies. They ensure that you can continue to live the lifestyle you are used to without the risk of losing your house, or not being able to pay your bills.
The great thing about Income Replacement cover is that there are a lot of options available.
What You Should Look Out For In Your Protection
When considering any insurances, it is recommended that you engage the help and support of an Adviser. The team here at Arrowsmith have an amazing amount of knowledge and experience when it comes to the products on the market and the options available.
Not all insurance policies are created equally. That is certainly the case with Income Replacement. Insurance companies are not going to take the time to explain each policy to you, they will expect you to educate yourself.
For instance, did you know that some Income Replacement policies are limited to a 2 year benefit? That means, after 2 years, any payments will stop. What do you then do between that time and the time you can access those Kiwisaver funds we mentioned before? You need a policy that will protect you until you are 65 or 70 and Arrowsmith can help you get that policy.
Some policies will even insure your Kiwisaver contributions. That means, the contributions still get added to your fund even if you are unable to work due to illness.
One last thing that you should check is the protection benefits with your employer, if there are any in place. Do you know what they cover and how long it covers you for? Again, many of these covers will only last for 2 years.
The thing with Income Replacement is that it is all about knowing what you have and managing the risk - ensuring you have the right policy for you.
So if you want to check that your most important asset is going to be covered in the right way and for the right length of time, get in touch with us here at Arrowsmith for a free review. Drop us a line today.