Income protection

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This is often a part of risk management that is overlooked, or at least, too little attention is paid to this part of the planning. When asking clients what they consider to be their biggest asset, a common reply is their home. However, I consider one’s largest asset to be your ability to earn an income. After all, most of what we have is because we have an income to provide us with what we want and need. Imagine the picture, if at any particular time and for whatever reason, your regular income suddenly stops! Without your regular monthly income you couldn’t meet your monthly commitments, such as home loan repayments, car repayments, medical aid premiums, school fees and many more of life’s simple pleasures we’ve become accustomed to.

While many of us have good (and expensive) medical aid plans, some illness’s or injuries could trigger a lifestyle change and keeping your income consistent is crucial when it comes to being in a position to maintain a lifestyle. The medical aid will cover medical related expenses only – life goes on.

When discussing this area of financial planning, there are many questions to be asked. It is important to establish whether you have a company benefit fund. If so, is there a disability element – will it pay a monthly income or is it a capital lump sum payment on permanent disability only? What is the waiting period? Is it on a basic salary (there’s a difference in benefit if you also earn commission) or is it calculated on the cost to company? Do you need cover in your personal capacity to top up on any shortfall a company benefit may not offer you?

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)