For young people in particular, their biggest asset is their income-earning ability
Not all people have enough income protection insurance.
It is amazing that so many financial planners donot talk about it.
About 35 per cent of people insure themselves for income protection - and the vast majority of those people are self-employed.
Many people in full-time employment rely on an income protection through superannuation that they may not actually have.
A lot of people think they have protection through super when they do not.
Also, people do not understand the difference between total and permanent disability benefits and temporary disability benefits.
Take a moment to check your policy: the answer may surprise you.
Attitudes to income protection can be baffling.
If you do not have an income, then there are all the other things that are dependent on that - you cannot pay the mortgage, you cannot feed the family.
A lot of people could only go a month or two without income.
Ask the population if they have home and contents insurance and 90 per cent would say yes.
But they do not think they have to insure themselves, and they are the ones generating the money to pay for all this.
Then there is redundancy.
Many mortgage providers offer - and sometimes insist on mortgage insurance.
It is estimated that ten per cent of people have taken income protection with their mortgages over the long term.
But that is more historical than current; it used to be more like twenty per cent and now it is more like five.
People feel a lot more confident.
This sort of insurance means that if you lose your job, or your ability to earn income for another reason, the policy will continue to pay your mortgage.
Periods vary with policies but can be one to two years.
Some institutions require people to get mortgage insurance, particularly if they are gearing heavily in their mortgage.
If the loan to value ratio is above 80 per cent, for example, many lenders will require mortgage insurance ... with good reason for doing so: at the 80 per cent level, about 1 per cent of mortgages default. At the 90 per cent level the default figure climbs to 2.5 per cent.
Then there is the loss of income from an untenanted rental property.
Landlord insurance can cost as little as a couple of hundred dollars and covers, for example, defects in the building or damage caused by a tenant.
But if you cannot rent it just because it is unpopular, you cannot protect against that - it is a case of looking closely at the quality of the product in the first place.
