Car Insurance vs Income Protection: What's More Important?

What do you consider more important? Is it your car or your income? I think it’s safe to assume with that question, that majority of people will say their income. This makes the following table quite interesting.

The table is taken from the Lifebroker Life Insurance Research Report February 2010. It is an indication of what type of insurance Australians take out to protect themselves, and their assets.

The table indicates that Australians are insuring their homes, their cars and their health, over their lives and income. If you look at this situation logically, it should be your income that you are protecting. Your income is the driving force behind you owning your home. It’s the reason you’re able to buy a car. It’s how you dress yourself and feed yourself.

Your house may get burgled one day. Maybe it will burn down. You might have a car accident. Maybe your office will flood. You have taken steps to ensure you are able to cover from these situations by taking out insurance.

The likelihood of these situations happening are never too great, but you take these steps for peace of mind. If you didn’t have these types of insurance in place, you would survive. You are able to push through. If you still have an income, you can rebuild your life.

Surviving without your income however, would be a struggle. Maybe even impossible. If you fall ill or injure yourself and are unable to work, who will cover the rent or your mortgage repayments? Who will pay the bills? Buy the petrol? Fill the pantry? 

It would be almost impossible to start over without money. If you fall ill and have an extended stay in hospital or at home recovering, your income will most likely cease, which in turn will affect your cash flow.

In the debate of car insurance v income protection, what is more important? Ultimately the decision is up to you, however, it is safe to assume that income protection will help your monetary situations in the long run.