Starting a new job

So, you are starting a new job. Congratulations! Changing jobs ranks in importance with getting married or having a child as it is a way to boost your income.

Now, as well as focusing on how much you are worth in this new job take some time to think about protecting what you are worth.

Most people insure their car and their home and contents but not their income. Yet our research shows that most people would not be able to meet their existing financial obligations beyond three months if something happened and they couldn’t work.

If you are single and have a mortgage, ask yourself how long would you be able to meet your financial obligations, including your mortgage, if you became ill or injured or were unable to work?

Or, if you are a parent, how long would you be able to pay the mortgage on your family home, your children’s school fees and/or living expenses such as running a car, if you couldn’t work due to illness or injury?

Most people hear life insurance and think “˜pay out after death’ but income protection insurance is a type of life insurance that protects your income if you get sick or injured.

As the name suggests, income protection is designed to replace your income should you become ill or injured and were unable to work, for example, if you suffered a heart attack or stroke, got cancer, or had a serious car accident. This type of policy generally pays up to 75 per cent of your pre-injury or illness salary.

Many people have term life insurance through their superannuation fund, but this is often inadequate to cover their existing debts including their mortgage, and to pay for ongoing family expenses. Income protection insurance is increasingly offered by super funds, but is not automatic. You will likely have to fill in some forms, with reference to your medical history and income.

As policy wordings may be complex, you may prefer to speak to a financial planner who can select a policy that offers the most appropriate features for your situation, including your medical history. Or, approach a life insurer directly. Note too that Income protection premiums are tax deductible.

When changing jobs you can choose what super fund you prefer for your employer’s 9 per cent super contributions so check with that fund to see what automatic life insurance you may already have.

Another way to assess your insurance needs is to visit Lifewise and use the Lifewise calculator. In the meantime follow our tips:

“¢ Use your job start or change as a trigger to review your personal insurances
“¢ If you have debt or dependents you should have adequate life insurance
“¢ You will have to choose a super fund when you change jobs, so review the automatic life insurance offered by your super fund
“¢ Your income is probably your most valuable asset, therefore consider income protection insurance. It is tax deductible
“¢ Policies for income protection differ. If you feel unsure, consult a financial planner to select a policy that’s best for your situation, including medical history. Or, approach a life insurance company directly
“¢ To find out more about life insurance and protecting yourself and your family financially from accident, illness or death visit the Lifewise website, www.lifewise.org.au