Meet Bruce and Sally Johnson and see how they've made Income Protection through superannuation work for them.
The Johnson Family
Bruce Johnson is a school principal in Wollongong with an annual income of $85k.
At 40, life is good. Bruce is married to Sally and they have two pre-school aged children. After having their children Sally stopped work, preferring to stay at home and look after them. Bruce and Sally recently bought a house close to Bruce's work so that he didn't have to spend long hours away from the family. They have a mortgage of $450,000.
Right now Bruce's priority is to repay the mortgage as soon as possible and free up cash flow. He understands the importance of retirement savings but for Bruce and Sally, their priority is the here and now - particularly in the pre-school years, while Sally is at home with the kids.
What if something happened to Bruce that meant he couldn't work? What if he were unable to work for a long period, due to illness or injury? How would he meet the mortgage repayments? How would they maintain a reasonable standard of living?
Consideration
A good way of protecting Bruce's income is through Income Protection insurance, but given Bruce's priority of repaying his mortgage debt he is unsure if he can afford to pay the premiums.
Solution
One possible solution for Bruce could be using his superannuation contributions to pay for his Income Protection insurance premiums. This way Bruce and his family can receive the benefit of income protection cover without the out of pocket expense.
