Young and bulletproof? Not quite
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You are young, fit and healthy, and potentially mortgage and children free. You couldn’t possibly need life insurance, income protection or cover for trauma or total and permanent disability right?
It’s a fact of life that illness and injury can and do happen to people of all ages and fitness levels, and while we hope the worst won’t happen to us, it is sensible to have an appropriate plan in place to make sure that – no matter the circumstances – your livelihood is protected.
While you may not have a partner or family to support in the event that the unthinkable happened, you probably rely on every cent of your income to support your lifestyle. However, if you broke your leg skiing or playing footy, or got glandular fever and couldn’t work for three months, how would you cope?
After a few weeks sick leave runs out (assuming you have it), how would you continue to make rent or car loan repayments, pay your mobile bill and your gym fees, let alone take trips away or nights out with friends? Even if you have salary continuance cover through your superannuation fund, you may find it doesn’t kick in until after three full months. Could you wait that long?
Zurich’s research[i] has found that 38% of Australians could only survive one month if they were forced to rely on their savings, meaning even a minor condition could be financially devastating if it means you can’t meet the myriad expenses of everyday living.
You may still be young – but most Australians under the age of 25 are not care-free.
Young people aged 16 to 25 carry a high proportion of debt to income. Recent data shows one in three in this age group carry more than $2,500 forward in credit card debt each month and those aged 21 to 25 have an average income of just $791 a week[ii].
The data also found 215,000 Australians aged 18-24 had a personal loan for a car and the average amount owed was $11,010.
This is the time in your life when you should be setting yourself up for the future – not sticking your head in the sand. Running into debt troubles can have serious implications later on, particularly when applying for a mortgage and personal loans.
It is important for young Australians to understand that debts don’t disappear because you’re sick or injured and can no longer work. Someone has to pick up the cheque. So for young singles, who may not have a partner or family to support in the event of major accident or illness, there’s nothing better than having the assurance that your finances will be protected, no matter what happens to you.
Income Protection insurance brings you this guarantee. If you suffer a serious illness or injury, you will have financial protection of up to 75% of your gross earnings to keep you afloat until you can get back to work.
Most importantly, Income Protection makes sure your income doesn’t cease during these trying times so you can focus on the most important task at hand – your recovery.
Contribution by Zurich Financial Services
[i] Australians and Life Insurance: misinformed, misinsured?, Zurich Financial Services Australia, February 2014, http://www.zurich.com.au/content/dam/australia/life_insurance/zurich-australia-whitepaper_australians-and-life-insurance_misinformed-misinsured.pdf.
[ii] S. Elsworth, Young adults drowning in debt, Herald Sun, 14 July 2013, http://www.heraldsun.com.au/business/save-kids-who-drown-in-debt/story-fni0cp8i-1226679435719.
Important Information: The content of this publication are the opinions of the writer and is intended as general information only which does not take into account the personal investment objectives, financial situation or needs of any person. It is dated August 2015, is given in good faith and is derived from sources believed to be accurate as at this date, which may be subject to change. It should not be considered to be a comprehensive statement on any matter and should not be relied on as such. Neither Zurich Australia Limited ABN 92 000 010 195 AFSL 232510, nor Zurich Investment Management Limited ABN 56 063 278 400 AFSL 232511 of 5 Blue Street North Sydney NSW 2060, nor any of its related entities, employees or directors (Zurich) give any warranty of reliability or accuracy nor accept any responsibility arising in any way including by reason of negligence for errors and omissions. Zurich recommends investors seek advice from appropriately qualified financial advisers. Zurich and its related entities receive remuneration such as fees, charges and premiums for the financial products which they issue. Details of these payments can be found in the relevant fund Product Disclosure Statement. No part of this document may be reproduced without prior written permission from Zurich. CLYH-010405-2015