Cost of living pressures have made Aussie families increasingly dependent on their weekly wage – making income protection cover more valuable than ever.
Recent figures from the Australian Bureau of Statistics (ABS) show the cost of living is rising once again, highlighting the importance of income protection for Australian families.
The consumer price index grew 0.2% in the last quarter of 2012 with an annual growth of 2.2% during 2012. And the price of some essentials increased even faster, with health and education costs up 7.7% and 6.1% respectively over the year.
For many families, coping with price rises like these is tough even with a regular income. But if a serious illness or injury meant that the family’s main breadwinner had to take time off work, many people would find it difficult, if not impossible, to pay for food, housing, electricity and other essentials.
Housing affordability remains an issue
While housing price increases may have eased off in recent months, ABS data shows that housing affordability remains an issue. Housing costs were up 0.2% during the quarter and 4.4% over the year.
Figures like these suggest that both home-buyers and renters are still feeling the pinch from high rents and house prices. The most recent available figures from the ABS show that over the previous decade housing costs for households with mortgages jumped an average of 42%, even after adjusting for inflation. Meanwhile, the average renter was spending about 20% of their gross household income on rent alone. For these families, even a temporary loss of income could prove devastating.
The high financial impact of illness and injury
Studies show that the financial impact of a serious illness or injury can be severe. A 2010 analysis by the National Centre for Social and Economic Modelling showed that a typical household with two children and two working parents could expect to lose around 68% of its weekly income if the main breadwinner was unable to work for an extended period. Despite this, surprisingly few families take steps to safeguard the income they rely on to get by from day to day.
Income protection insurance is an affordable way to protect your family’s lifestyle, if you become sick or injured. We encourage all Australians to stop and think about how they would cover daily expenses like rent, mortgage payments, groceries, petrol and school fees if they were temporarily unable to earn an income.
For families concerned about the rising cost of living, income protection is valuable protection well worth considering.