There's a good chance that for that three months there'll be no ability to work and, importantly, no ability to earn an income. What would happen to you and your family if you were in that situation? Could you still meet your mortgage repayments, deal with the bills and put food on the table?
For the majority of us the answer is no. And don't think that relying on workers compensation is enough. More than half of all serious accidents happen outside of work so if that's the case you won't be covered.
I'm not trying to drum up business for the insurance companies, but for about the cost of a cup of coffee a day you can take out income protection. In general you're able to cover yourself for up to 75 per cent of your regular income, and you can also opt to cover your super contributions. Premiums will vary depending on your age, sex, what you do and health issues such as whether you're a smoker. In nearly all cases they're tax deductible as well.
Here's where it gets a bit tricky and why you should get professional advice about the policy that's best suited to you. Policies typically give you cover for when you can't perform duties of your own occupation, but it pays to read the fine print.
Some policies only cover you for if an illness or injury means you can't perform ANY kind of work at all. So, say you're a building site manager earning $75,000 a year and sustain an injury leaving you unable to walk or stand. If you're still able to, say, sit down and talk on the phone, some policies won't pay up and you'll be required to get a job doing what you can, even if it's on a much lower salary.
It's also really, really important that you answer all the questions in your application forms honestly and that you provide plenty of detail. It's particularly important to include information about past injuries or illnesses, even if you have made a full recovery and they don't affect you any more.
If your answers are incorrect or too vague, or if your circumstances have changed since applying and you make a claim, your insurer may be able to void your policy.
If you're worried it all seems a bit hard, think of it this way; if you're still in the workforce your most valuable asset is you and your ability to earn an income.
