Most insurance companies provide income protection insurance for people as young as 16. However, do they really need it? The long hours of certain professions and the rise in mental health issues may suggest that yes, they do. It is therefore something that young adults (and their parents) should consider.
Why sooner is better than later
Get income protection insurance while you’re young and statistically more likely to be fit, healthy and mentally well. You’ll pay lower premiums because of your age, and you’re less likely to have pre-existing conditions that could exclude you from cover, or require you to pay higher premiums. This is particularly relevant for mental illness.
Approximately one in six New Zealanders suffer from depression, with the highest rates in people aged between 35 to 54. One in five report having anxiety or a mood disorder. Unfortunately, it’s often difficult to get income protection from mental illness if you already have a diagnosed condition when you set up a policy. Hence, getting income protection while you’re young and mentally well is a smart move.
As a career progresses, it is likely work hours will increase
The transition from study or training into a professional career is another good time to either set up income protection or re-evaluate it. As your career progresses, there is a chance your work hours will too, and that can have a negative impact on health and wellbeing. Long work hours not only increase stress and fatigue, but can also lead to a host of mental and family issues, which could result in you needing to take time off work.
Census data shows that nearly 20 per cent of Kiwi employees work more than 50 hours a week. Of that, 8.5 per cent work over 60 hours and, as a result, are virtually uninsurable.
It’s widely understood that stress is linked to physical wellbeing, but research from the Carnegie Mellon University has begun to shine a light on the true extent of this relationship. Not only does stress play a major factor in mental illnesses such as depression and anxiety, its physical symptoms, such as high blood pressure, elevated heart rate and hormone imbalances, can also lead to a range of illnesses including:
- Heart failure.
- Auto-immune disease.
- Inflammatory illness.
- Colds and viruses (due to poor immunity).
All of which are not covered by ACC.
Professions that become difficult to insure
Some professions are, by their nature, highly stressful. In the medical field, an alarming number of doctors experience professional burn out due to chronic stress and fatigue. In 2016, Stuff.co.nz reported that junior doctors regularly worked 14 hour shifts for 12 days in a row, equating to a whopping total of 84 hours a week.
The legal profession too, is another high-stress profession with 37.5 per cent of New Zealand lawyers working more than 50 hours a week, and 12.3 per cent working 60 hours or more.
Let’s not forget the physically risky jobs either. Tradespeople, plant machine operators and assemblers, and drivers regularly pull long hours, and have high rates of work-related injuries and illnesses. While ACC covers workplace accidents, it doesn’t cover body stressing injuries caused from overuse or repetitive movements. In the construction industry alone, body stressing—usually back and shoulder injuries caused by lifting—accounts for 39 per cent of workplace injuries with injured staff taking an average of 166 days off.
All up, working in high-stress, fatiguing or high-risk professions equates to a greater chance that you or your son/daughter will need to claim income protection at some point in their career. If you have a history of mental illness, stress or a body-stress injury before taking out an income protection policy, you could find yourself paying higher premiums, or have the condition excluded from your cover.
Our advice to young adults (and their parents): organise income protection early in your career when you don’t have any pre-existing conditions. As soon as you are diagnosed, you’ll have a difficult time getting cover for that condition.
To find out more about income protection insurance and how it can protect you and your family, download our free ebook below.