What is your most valuable asset?

When considering your most valuable asset, the answer to this question will differ from person to person. Some might be more philosophical, listing knowledge and wisdom or health and happiness. Others might consider their home or other high-value items their most valuable asset.

When it comes to financial planning, however, the answer relating to what your client's most valuable asset is, is quite simple: It is their ability to earn an income.

Income and earning potential are the most valuable assets because they provide the foundation for financial security and future opportunities. Earning an income is how your client:

• meets their daily needs
• supports their family
• covers essential expenses, and
• plans, saves, and achieves their financial goals by building wealth over time.

It is for this reason that income forms the basis of financial advice. If a disability or critical illness renders someone unable to earn an income, the implications on their financial wellness could be catastrophic.

Income protection in the case of disability or critical illness is essential to safeguard a person’s most valuable asset — their ability to earn a living. Let's face it — life is unpredictable. Unexpected circumstances such as illness or disability can profoundly impact a client’s ability to work and earn a living and a family's well-being if someone can no longer work.

Having financial protection to replace lost income and cover essential expenses during these types of challenging times is a safety net that not only offers peace of mind and stability, but is a way to mitigate financial risks and ensure that policyholders and their families can maintain their standard of living without added financial stress during difficult times.

PPS offers tailor-made insurance solutions exclusively for graduate professionals and we use a member’s gross professional income (GPI) to calculate the level of coverage they qualify for.

According to the recruitment portal za.talent.com, medical doctors start their internships with an annual salary of approximately R720 000. This may increase over time to up to R1.5-million per year. Based on the lowest possible income and an average of 6% inflation, a medical doctor could earn more than R32-million over 40 years of practising their profession.

Pharmacists, lawyers, engineers and accountants may start with a lower annual income, but their earning capability could surpass that of a medical doctor.

Some important factors to take into account on behalf of a member when looking for adequate income protection cover include:

• A graduate professional that earns a salary may include their total cost-to-company salary, including the average bonus they received over the last three years.
• Self-employed professionals may include their total personal income from their business and 100% of their actual business expenses.
• Any income a member generates through their occupation may also be included in their GPI.
• Passive income does not form a part of a member’s GPI.

PPS simplifies calculating professional income and offers solutions to suit the business or practice owner, graduate professional, or someone just starting their professional career.

For more information, visit www.pps.co.za. 

*Image courtesy of Canva