Facebook Twitter: @NeosKosmos Instagram Lifetime earnings for most Australians equal between four and six times the value of the equity in their homes. But while we insure our house, most of us don’t protect our incomes. We interviewed more than 500 employed people aged 20-45, most of them earning between $50,000 and $100,000 per year. The first thing I noticed? Just 3.1 per cent were unaware of income protection insurance, yet only 6 per cent of Australians protect their income. Interestingly, 31.7 per cent of the respondents didn’t think they had income protection unless it was provided by their super fund. I like that tax breaks are given to people who source their income protection insurance through their super funds. However, many members don’t pay much attention to what they are actually getting from their fund: three out of five of the major industry funds don’t have income protection as a default option, so if you’re relying on them to look after you in this respect, you could be out of luck. Also, funds offering default income protection have strings attached: one of Australia’s largest industry super funds enforces 90 day ‘wait’ periods before you can draw the income insurance and it has ‘capped’ monthly payouts at $850, regardless of how much you earn. I believe this is a matter that breadwinners should take control of, regardless of the ‘default’ insurance in their super. If you haven’t investigated these policies before, I urge you to talk with an insurance broker or financial adviser. You should have a policy that suits a full time, part time or self-employed person, and it must be a policy that covers what you need without paying for what is irrelevant. The cost is also an important factor in relation to income protection. Our research shows 42 per cent thought it was too expensive. So how much does it cost? It depends on a number of factors including monthly benefits, age, profession and smoking status. Here are four scenarios: Finance Manager, Male, 41, non-smoker, insuring a $5,000 monthly benefit (30 day wait; 12 month benefit). He will pay $39.52 per month. Nurse Manager, Female, 35, non-smoker, $4,000 monthly benefit (30 day wait; 12 month benefit). She will pay $41.42 per month (if any “hands on” it rises to $53.32) Domestic Plumber, Male, 29, smoker, $5,000 monthly benefit (30 day wait; 12 month benefit). He will pay $72.21 per month. Gardener (unqualified), 47, female, non-smoker, $3,000 monthly benefit (30 day wait; 12 month benefit). She will pay $117.56 per month. Remember, you can take income protection insurance in your super, but you can also buy it personally and claim the premiums as a tax deduction. Also, most companies will offer policies that cut off at 60 years old, but many policies are now extended to 70 – so long as you ask, which is why I suggest talking to a professional adviser. Start by at least asking what you’d do in the event of illness or injury. Be honest to yourself, and then talk to an expert. * Mark Bouris is the Executive Chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting & tax and insurance. Email Mark on [email protected] with any queries you may have or check www.ybr.com.au for your nearest branch.