Having the ability to earn income can boost your confidence in dreaming and living the lifestyle you have worked for.
As you know, being healthy day in day out, year after year of your working life is a pretty tall order. What if a severe illness or injury were to prevent you from earning income today for a period of time – weeks, months or even years? How long could you sustain the lifestyle you have worked very hard to create?
Here are 3 simple calculations to find out.
Step 1: Current position
Add up your total monthly expenses (mortgage/rent/, food, clothing, utility bills, child’s education cost, insurance etc).Disregard your main income; add up any other income after tax.
$monthly expenses – $other income = +/- $current position
Step 2: Emergency cash
Calculate your emergency cash fund by adding together any owed weeks of sick leave and annual holiday. Multiply this by your weekly income (after tax) and add that to any accessible savings.
weeks multiply $weekly salary plus $accessible savings=$emergency cash
Step 3: Funding months
To calculate the number of months sustainable without your income, divide emergency cash by current position.
$emergency cash divide $current position = months of self-funding
Did you know? 75% of Australians have had a disease or other health problem that had lasted, or was expected to last, 6 months or more. Source: AIHW 2010
What if you could not work more than your self-funding months and you still had to
- meet your mortgage repayment
- cover the cost of your immediate and ongoing health cost
- pay living expenses
- fund your children’s education – if you have any
How would you cope with all,beside your efforts to get healthier again?Well, do not stress up! There is a solution to your problem; Before too late, simply get your ability to earn income is insured. How?
Basically, income protection insurance provides up to 75% of your before tax income when you cannot work due to an illness or an accident.The benefit payment would be on a monthly bases like salary/wages.The good thing to know about this type of insurance is that premium payable is tax deductible.
I assume you will agree with me that your income is not just about paying your living expenses. It is also your lifestyle, your future! And insuring of your income is the cheapest option to consider when it comes to making sure you can receive an income in the event of not being able to work because of an unexpected illness or an accident.
Should you want to find out more about income protection plans, and the best possible strategy that suits your need feel free to contact Halle Yilmaz.
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Halle Yilmaz is a financial adviser and business consultant. As a financial adviser, she gives solid advice that can create rapid and lasting results for her clients. Sign up for her free E-Book and download “7 Steps to Healthy Wealth Management.” Follow Halle on Twitter @halleyilmaz