Do you how much Centrelink pays for sickness benefits?  In case you’re curious, it’s just over $400 a week1 for a couple, not enough to even service the weekly mortgage repayment on an average mortgage, let alone feed a family or meet the lease payment on the fancy ute sitting in the driveway.

Most of us are not interested in Centrelink benefits until we’re staring down the barrel of financial ruin brought on by an inability to meet our commitments, most often which comes about because of unexpected illness or injury.    And don’t think you’re immune.   While there are statistics, statistics and then there are statistics, research consistently shows that the blokes more so than the girls are likely to suffer from an illness or injury.  Here are some statistics to get you thinking:

• A 30 year old male has a one in three chance of suffering an illness or injury before 70.2
• Men have a higher work-related injury or illness rate (74 per 1,000 men) than women (51 per 1,000 women).3
• The industries with the highest work-related injury or illness rates are agriculture, forestry and fishing, and construction and mining3 – industries dominated by men.  

These figures are also reflected in insurance statistics.  A quick look at ING4 and Aviva5 statistics for example shows the most common occupation to become injured are tradespeople and building workers with accidents, not illness, as the most common cause for income protection claims.   In 2006, 89 percent of ING’s income protection claims were from males, with Aviva reporting a similar figure of 80 percent of income protection claims coming from the guys.

While the statistics are food for thought, adequate insurance protection is essential regardless of the industry you work in.   You might think you’re covered by Workers Compensation if you’re injured on the job but ABS research shows that less than half of those who experienced a work-related injury or illness received workers compensation6. 

Income protection can provide up to 75 percent of your income if you become injured.  And make sure you protect your insured income, not just your taxable income.  This is important for those self employed people who may split their income between themselves and a family trust or for those who need to consider vehicle lease arrangements etc.

When taking out your income protection insurance also look at waiting periods, that is, the period of time at which you stop earning an income to when the benefit kicks in.  A longer waiting period reduces premiums but you need to be able to cover yourself financially during this period.  Also, don’t forget to regularly review your insurance situation.  A good time for review is anytime there is a life changing event – a new business venture, a new mortgage, a pay rise, a new family member.

If your insurance needs reviewing, give your financial planner a call, or if you don’t have one call us on 1300 766 323 and we will create an insurance plan to suit your circumstances.

1. http://www.centrelink.gov.au/internet/internet.nsf/payments/pay_how_sck.htm
2. Based Asteron Claims Data on insured, non smoking lives
3. Young men at most risk of work-related injury or illness http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6324.0Media%20Release2005-06?opendocument&tabname=Summary&prodno=6324.0&issue=2005-06&num=&view=\
4. ING Retail Claim Payments 1996 http://www.lifeinsuranceadvocates.com.au/statistics/ING_statistics.pdf
5. Claims for Income Protection from 1990 – 2006, Aviva. http://www.lifeinsuranceadvocates.com.au/statistics/Aviva_Critical_Illness.pdf
6. Work -Related Injuries, Australia September 2000, ABS cat 6324.0 October 2001

Please Note:

This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you need to consider (with or without the assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances. This information is provided for persons in Australia only and is not provided for the use of any person who is in any other country.

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