MyMoney Online

It costs peanuts to insure your most valuable asset

What do you consider to be your most valuable asset? For almost all of us it’s our ability to earn an income.

Your house is not your biggest asset!

Consider a 25-year-old man earning R25 000 per month. Let’s assume his income grows along with inflation (six percent) and he retires at 65. He would’ve earned roughly R46-million!

Do you still think your house is your biggest asset?

How to insure your biggest asset by far

An income protection policy insures you against loss of income due to temporary or permanent disability or illness.

In other words, if you are unable to do your job due to injury or illness, the insurance company will pay your salary until you can return to work or, in the case of permanent disability, until you reach the retirement age (or even for the rest of your life).

How much does it cost?

Let’s assume that the man mentioned in the example above is a non-smoker earning R300 000 per year. He has an undergraduate qualification and works in an office.

The cost of insuring his income is about R130 per month.

The cost of insuring a woman of the same age and income could be slightly cheaper.

You might have income protection already

Many employers offer income protection under their company’s pension or provident fund. Make sure you understand the benefits and that you don’t have shortfalls.

Insurers differ in how they structure and price their products. Shop around, but stick to a reputable company and a financial advisor you can trust to offer honest advice.

Insuring your future income should form the foundation of your financial portfolio.

Also read the following articles by Claude Hannah:

- How much you should save for retirement

- Savers rejoice! South Africa gets tax-free savings accounts on 1 March 2015

- Why medical aid is woefully inadequate (and how affordable gap cover helps)

- Can’t (or won’t) buy to let? Don’t sweat; there’s a far more lucrative option

Claude Hannah is a financial planner for Venn-Sure Consulting. He completed a degree in Financial Risk Management from the University of Stellenbosch in 2006 as well as a post graduate diploma in Financial Planning. Claude helps to organise and simplify the often complicated and busy financial lives of his clients. He takes great pride in providing the highest level of service to help his clients build and protect their wealth. For more information, email him (claude.hannah@liblink.co.za) to arrange for a free consultation.


Recommended

by NEWSROOM AI
Read More
3 best JSE and offshore shares to buy, right now (by Anchor Capital)

3 best JSE and offshore shares to buy, right now (by Anchor Capital)

The Money Show’s Bruce Whitfield asks Henry Biddlecombe (an analyst at Anchor Capital) for his stock picks of the week.

How to make your first R1 million (after that it just becomes so much easier)

How to make your first R1 million (after that it just becomes so much easier)

Rich. Wealthy. Financially free... Call it what you will; the first million is how you get there. Warren Ingram on his book...

Can’t (or won’t) buy to let? Don’t sweat; there’s a far more lucrative option

Can’t (or won’t) buy to let? Don’t sweat; there’s a far more lucrative option

Financial planner Claude Hannah compares the costs, risks and returns of property unit trusts to that of buy-to-let properties.

Why medical aid is woefully inadequate (and how affordable gap cover helps)

Why medical aid is woefully inadequate (and how affordable gap cover helps)

It may come as a shock (but it’s all there in the small print); medical schemes do not fully cover you when you’re hospitalised.

Savers rejoice! South Africa gets tax-free savings accounts on 1 March 2015

Savers rejoice! South Africa gets tax-free savings accounts on 1 March 2015

Savers rejoice! On 1 March 2015 government introduces tax free savings accounts. Financial planner Claude Hannah explains…

How much you should save for retirement

How much you should save for retirement

You know you should save for retirement, but do you know how much? Financial planner Claude Hannah breaks it down in simple terms.

Popular articles
Capitec Bank has the strongest brand of any company in South Africa

Capitec Bank has the strongest brand of any company in South Africa

Castle Lager came in second, followed by FNB, Black Label, Discovery and Vodacom, according to the 2019 Brand Finance report.

I haven’t saved. I intend to work well into my 100s - Leon Louw (FMF)

I haven’t saved. I intend to work well into my 100s - Leon Louw (FMF)

Bruce Whitfield talks to Leon Louw (Free Market Foundation) about his attitude toward money (hopes, fears, successes, failures...)

3 best JSE and offshore shares to buy, right now (by Anchor Capital)

3 best JSE and offshore shares to buy, right now (by Anchor Capital)

The Money Show’s Bruce Whitfield asks Henry Biddlecombe (an analyst at Anchor Capital) for his stock picks of the week.

Advisor scams pensioners out of R100 million with promises of 14% returns

Advisor scams pensioners out of R100 million with promises of 14% returns

Bruce Whitfield interviews Phillip de Wet (Business Insider), Robert Walton (Boutique Collective Investments) and Brandon Topham.

'I've been poor. I remember the angst, the depression'

'I've been poor. I remember the angst, the depression'

The Money Show’s Bruce Whitfield interviews Lira about her attitude to money (hopes and fears, successes and failures, etc.).

'I should have told the Sunday Times the pot smoking was irrelevant'

'I should have told the Sunday Times the pot smoking was irrelevant'

Investigative journalist Jacques Pauw says he's sorry for any harm caused in his article on Mkhwebane and her principal witness.

I decided to make this Rihanna song with my maskandi vision - Mbuzeni Mkhize

I decided to make this Rihanna song with my maskandi vision - Mbuzeni Mkhize

After South African star Mbuzeni Mkhize performed a remix of Rihanna's track 'Diamonds' she contacted him to collaborate with her.

What are the best investment options if you decide to go it alone?

What are the best investment options if you decide to go it alone?

Certified financial planner Paul Roelofse gives the lowdown on the money market, retail bonds and exchange-traded funds.