Statistics tell us that around 6% of the population have a severe disability which prevents them working. Many of these are only able to return to work in a part time capacity.

Whilst some costs of disability are known, the real cost to the community is incalculable. Less obvious, but just as important is the impact that disability can have on a family’s life.  Suddenly the mortgage is unpaid as is the car loan, medical and pharmaceutical bills escalate, the partner has to give up paid work and take up carer responsibilities, the credit card mounts up and there is barely enough money to put food on the table let alone put petrol in the car.  

In the short term, a family will generally survive. The disabled person returns to work, bills are caught up over time and life returns to normal. But what of those who have long term disabilities or who will never return to work or without the ability to generate the same level of income? Life as they knew it will never be the same. Their homes are sold, children are pulled from private school, their savings destroyed and lifestyles gone.

While most of us believe it happens to others, it can in fact happen to any one of us at any time. So what do we do about it?  There are insurance covers available which can insure your income.  Even though these are tax deductible, there is reluctance by many people to take them up and the penetration of these policies in the marketplace is quite low. This was the same situation with superannuation only a few years ago.

Before compulsory superannuation was enacted, the take up of superannuation by those not in employer schemes was quite low. Compulsory superannuation changed all that.

Many of the large superannuation funds provide for some form of salary continuance. That is, if a member becomes disabled, after a waiting period, the insurance in the scheme pays them 75% of their income for up to two years.

So why not extend the superannuation guarantee from its current 9% of income to 10% and include the salary continuance cover as mandatory? It would benefit employers and employees. Employees will be able to pay their bills and employers will have any moral responsibility to help their employee removed and benefit from their earlier return to work.

Not only that, there would be enormous savings to the community in pensions and other costs. The lives of the disabled would be improved as would that of their families.  

At the same time these products might be enhanced to ensure payment to the disabled up to their retirement and continue to pay some income where the return to work was only part time.

What do you think?