Estimated reading time: 5 minutes
We understand that life’s unexpected events can have a profound impact on your financial security. For families, especially those with young children and significant financial commitments, the sudden loss of income can be devastating. That’s why we emphasise the importance of having the right insurances in place —a safeguard that ensures your financial goals remain within reach, even when life takes an unexpected turn.
This case study highlights how we assisted one of our clients, a family’s primary breadwinner, in securing income protection cover in Penrith. This decision later proved to be a lifeline when the unthinkable happened.
The Client’s Situation
Our client was the sole income earner in their family, with a substantial mortgage of approximately $650,000 still owing on their Penrith home. Their spouse was on maternity leave following the birth of their second child, and the family was heavily reliant on the client’s income to cover their living expenses, mortgage payments, and support their growing family.
The client was deeply concerned about the potential impact on their family if they were to lose their ability to work due to illness or injury. They feared that without a steady income, they might be forced to sell their home. They also worried that their spouse might need to return to work earlier than planned, relying on childcare or family support for their two young children.
Our Advice
Recognising our client’s concerns, the team at MLS Financial worked closely with them to assess their financial situation, goals, and risks. As part of a broader financial plan, we assisted in setting up an income protection policy that provided a robust safety net, tailored to their specific needs. The policy included the following key features:
- Waiting Period: 30 days before benefits began to ensure timely support in the event of a claim.
- Benefit Period: Coverage until the client reached age 65, providing long-term security.
- Coverage Amount: A benefit of 70% of the client’s gross income, ensuring they could maintain their standard of living even if their ability to work was compromised.
With this policy in place, the client felt reassured that their family’s financial future was protected.
The Unexpected Event
A few years after taking out the income protection policy, the client, still in their 30s, was involved in a serious motor vehicle accident. The accident caused extensive physical injuries and psychological trauma, which significantly impacted their ability to work. The client was bed-bound for six months and, even after recovery, faced long-term limitations, including the inability to drive, which reduced their earnings by 40%.
The Income Protection Claim
Fortunately, because of the income protection policy we helped the client secure, they were able to make a claim and receive the following benefits:
- Full Benefit Payments: After the initial 30-day waiting period, the client received 70% of their gross income for the next five months while they were unable to work. This financial support allowed the family to continue paying their mortgage and living expenses without the need to sell their home or significantly alter their lifestyle.
- Partial Benefit Payments: As the client transitioned back to work in a limited capacity, their income protection policy continued to provide partial payments. These payments compensated for some of the 40% reduction in earnings due to their inability to drive and perform certain job duties. This support is ongoing, helping t mitigate the client’s reduced income and the strain on the family’s finances.
The Benefits of Income Protection
The income protection policy had a profound impact on the client and their family:
- Long-Term Support: The partial benefit payments provided by the policy offer ongoing financial assistance as the client continues to recover and adjust to their new work situation.
- Financial Stability: The client’s income protection coverage ensured that their family’s financial obligations, including the mortgage, were met, even during a period of significant income loss.
- Peace of Mind: Knowing that their income was protected allowed the client to focus on recovery without the added stress of financial uncertainty.
- Family Security: The client’s spouse was able to remain on maternity leave as planned, providing crucial care and support for their young children without being forced to return to work prematurely.
Contact MLS Financial for Income Protection in Penrith
This case study demonstrates the critical role that income protection insurance plays in safeguarding your financial future. At MLS Financial, we are committed to helping our clients prepare for the unexpected by providing tailored advice and solutions that meet their unique needs and goals.
In a world where accidents and illnesses can happen without warning, income protection offers the peace of mind that comes from knowing your family’s financial security is protected. Don’t leave your future to chance—contact us today to discuss how income protection can fit into your broader financial plan and ensure that you’re prepared for whatever life may bring.
If you want to discuss any strategies for your financial plan, contact MLS Financial today through our online contact form or on 1300 791 800.
Disclosures:
- This information has been compiled from sources considered to be reliable, but is not guaranteed.
- The information contained on this website is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. MLS Financial and Infocus Securities Australia Pty Ltd strongly suggests that no person should act specifically on the basis of the information contained herein but should seek appropriate professional advice based upon their own personal circumstances.
