Net Net TOUGH-Bullet Proof Your Income
Course #6 of 9 – Your Biggest Asset is Your Income, Protect It!
- Is your income a key part to living your desired lifestyle?
- What does it look like to bulletproof your income?
I will repeat it, your income is your biggest asset! You be having the ability to go to work everyday make money that ends up in your bank account provides for a lot of things in your life.
If that income was gone in your plan, would your family be affected?
Use the analogy – if you could walk down stairs to your basement every day or once a month maybe. When you went into your back room, under the stairs… you know the one. In that little room, there was a machine. You rub your eyes and think about what your day is going to bring… fun, family, hobbies, investments and maybe stop at Starbucks for a Latte. You reach out and push the big green button and it spits out $5,000. This happens every month.
One day all sudden that machine didn’t work. Would that affect your life and your lifestyle?
Well of course it would. Now roll back in time, when you first got the machine would you put insurance on that machine to make sure it continued to spit out that money month after month?
Specific to your financial plan, what are your options to ensure your income doesn’t stop – there’s basically two types of income protection. One is a monthly income stream that continues after you’ve been hurt or off work for a set amount of time.
Common policies will kick in after you’ve been hurt / injured and off work for 90 days (the elimination period). The policy then pays monthly until say age 65 (the benefit period). Some policies can pay for 2 years, 5 years or to age 65. If set up right, this would pay $5,000 tax free all the way until you’re 65. This could keep your financial goals intact, while you recovered.
The other type of policy is critical illness insurance which pays a lump sum. So no monthly income stream, but it is a lump sum meaning, you’re diagnosed with one of 20-24 illnesses or conditions (outlined in the policy) and into your bank account goes an injection of a lump sum of money, then the policy terminates.
Action Step:
- Use your BAM Monthly Cashflow Tracker to determine what expenses would still happen if you could not work/generate an income.
- Look at how much you have in savings/investments.
- Divide the amount you have in savings/investments by your BAM Monthly Cashflow
- That is how many months you have of reserve until YOU ARE BROKE and your family is scrambling.
- If you don’t like how long the money lasts, then put “review disability insurance” on your TO DO LIST.
There are also types of disability and critical illness insurance that give you a refund if you don’t claim. See in this video, I explain it.
Those are the two ways that you can bulletproof your income to ensure that your financial plan is not interrupted should one of these things happen.