Let’s say you make $70K annually. The insurance company that is A-rated will protect $3,550 dollars of your earnings. This is your net. In one year that is $42,600 dollars take home after taxes.
This is when Income Protection becomes a defensive asset for you and the family.
If you were to experience a major setback that prevented you from doing your own actual occupation, you would no longer receive the $42,600 dollars. Your job would insure up to 60% of your income which would cut this salary in half. You would now receive $21,300 dollars. In addition, you would receive a nice tax on the $21,300 that will send you below the poverty line.
How do I bring the defense?
Well, you secure your own personal cash flow plan that would supplement you’re lost of cash. Nobody likes losing cash. In doing so, you are able to regain all you are accustomed to having for certain benefit period. Let’s look at an example:
Potential Annual Benefit ($42,600). Breaking this formula into 12 months:
$3,550 x 12 = $42,600 x 10 years(benefit payout period) =$426,000.
$3,550 x 12 x 65 years (benefit payout period depending on how close or far away from age 65 you are.) = $2,769,000
protecting your cash flow is necessary. Look at your potential earnings! #BOOM. You just put a financial defensive asset in your wealth building that is securing your cash flow no matter what may happen in life. Your cash is ready to still work for you!
What does your potential earning bag show you??????