Your income is your biggest asset

Most people insure things they can see. Their car, house, and sometimes even their phone. The one asset that actually pays for all of it is usually left uninsured.

Let’s run the numbers. Someone on $90,000 a year, working from 30 to 65, earns close to $3.15 million over their career, not including any pay rises. Car insurance is treated as non-negotiable, and home insurance too, but income protection gets pushed down the list, or sometimes forgotten about entirely.

This insurance gap often shows up at the worst time. A tradie falls off a ladder and can’t work for eight months, a teacher gets a cancer diagnosis and needs six months off for treatment, or a sales rep ends up in a car accident that wasn’t even his fault. Nobody plans for these things, and almost nobody has a plan in place for when they happen.

Income protection replaces part of your income, usually up to 70%, if illness or injury stops you from working. It’s not built for the dramatic scenarios people associate with life insurance. It’s for the far more ordinary situation where you’re alive and recovering, but the bills keep arriving anyway.

Savings disappear faster than you might expect, with sick leave often running out in weeks. Unfortunately, your mortgage doesn’t pause because you’re in hospital. Without cover, a temporary setback can become permanent.

Cover often costs less than people assume, especially compared with what’s actually at risk. Annual premiums can be funded personally or by your superannuation. Your adviser can discuss with you how best to fund your protection.

If your home and car are covered but your income isn’t, it’s worth understanding how you can become better protected.

Talk to your adviser about protecting your biggest asset.