Consider...
What would happen if there was no wage?

We are up to our ears in debt, most of us living pay packet to pay packet. In just 20 years, household debt as a percentage of disposable income, has quadrupled, from around 40 per cent to close to 160 per cent.

According to figures compiled three years ago (and the levels would be higher now) the average monthly home loan repayment in Australia was $1500 a month, while other debt averaged $14,000 per household. That's the debt; then there are the future obligations.

Back in 2003, Natsem, a research institute connected with the University of Canberra, compiled a report showing that it cost the average Australian family $448,000 to raise two children from birth to the age of 20 -- or around $310 a week.

Right, so you have a mortgage, the car insurance due, the school bills to meet, the family to feed and clothe -- and you get injured in a car smash, or develop cancer. After the sick-leave payment runs out, and you get diagnosed with 40 or 50 days up your sleeve, there is suddenly no money. With over 345,000 cancer cases in Australia diagnosed every year this is a reality.

David Evans, head of product at MLC Insurance, provides another wrinkle to the above scenario: you are on your second marriage, and so there's money going there as well.

"People are having to stay at work longer -- there is not only more household debt, but there is debt lasting longer," he says.

Losing your income stream is not a good look in this situation. Yet more than half the working population has made no provision for the eventuality of the pay packet ceasing to exist due to illness, accident or death.

When you come to think about it, that really is dicing with financial death.

Sure, the premiums might seem a stretch when you've got all those existing outgoings. But, remember, premiums are tax deductible. So, if you are on the top tax rate, the federal Government is picking up around 45 per cent of the tab.

Evans said the first decision needed is about the type of product you want. The choice is between a policy that pays you 75 per cent of your income through to age 65, but you can go the cheaper way and take coverage for two or five years. A two-year cover may be fine if you break a leg; not so good, though, if you get cancer or some other form of serious illness that leaves you unable to work for the rest of your life. And, if the bad news is cancer, there is not just the loss of income but -- if you have no income -- you will have to let your health insurance go, along with limited medical treatment.

Starting to get the picture? Starting to think, hmm, perhaps I should look at this income protection -- and trauma insurance and life insurance -- thing?

Then comes the taxing task of finding your way around all that is on offer. The products are getting all the more sophisticated as time passes.

There any many providers of income-protection, and there are not only varying premium (cost) structures, but also various bells and whistles. Then the consideration of whether insurance through superannuation is an option for you.

The Investment & Financial Services Association (IFSA) published research three years ago that showed just how many variables there were when it came to insurance policies provided by superannuation funds.

Premiums for death-and-disability policies could be 22 times greater in one fund than another, and there could be variations of up to $500,000 in the amounts that could be insured without medical evidence.

So this means that, when choosing a fund, you have to look not only at the performance of that fund with super earnings, but also the types of deals that are available for death and disability insurance.

The Australian Consumers' Association provides a checklist. Ask all the questions -- what is covered, details of premiums and payouts. Think about inflation. Think about whether your cover should be linked to the consumer price index. Check whether the insurance company can cancel your policy along the way, or require additional health checks for continued coverage. Check how your payouts might be affected by sick-leave pay or welfare entitlements. With insurance provided through your super, make sure you specify your beneficiaries. What are you covered for? Is it inability to do your normal job, or inability to do any job? In other words, if you are a concert violinist and you hurt you hands, can you receive income support based on that injury, or will your insurer expect you to get a job stacking supermarket shelves?

Organising insurance can be a messy game to play. Some people are declined by the insurance companies. Others have exclusions put on their policies, or have much higher premiums charged. If you have had a heart attack, stroke or cancer, then that raises the acceptance bar much higher. Pre-existing conditions may well be excluded from your income-protection cover.

If you are self employed you will need to sort out the financial statement up front. This means establishing with the insurer, in advance, of your real earnings position and getting an agreed payout sum should the employed person lose their earning capacity.

If you are a self-employed tradesman, notes Tower Australia products manager Keith Moynihan, you not only need insurance in case of accident or illness, but sometimes to do your job.

Most construction sites now require sub-contractors to have full income-protection insurance -- the project managers don't want to be sued if there is an accident.

But he says the most important thing to impress on people is that their lifestyles are at risk.

Everything they have or do can be threatened by loss of income -- and the main dangers are accident or injury.

Not having cover in those eventualities is something that can be devastating. "It just destroys people for life," Moynihan adds.

Gerard Kerr, head of retail products at ING Australia, says that women need to be especially concerned about their earnings security -- both if they are the sole earner or it is a two-income relationship, the latter more and more common these days as families find they need two pay packets to keep their heads above water.

Women in the workforce have higher sickness statistics than men. Pregnancy complications are one obvious cause, but women also have higher rates of such illnesses as multiple sclerosis and lupus.

Insurance cover is different for every person… there are not two individuals the same. To assist you with this Members First invites you to speak to one of our Risk Specialists to organize an appointment to review the best option to cover you during such financial critical times.

For more information on how insurance can be tailored for you, please call us on 1300 133 738 or email us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it