Income protection can help protect against cost of living rise
The cost of living in Western Australia is set to rise following the state budget announcement on May 8.
Premier Colin Barnett promised in the March 2013 election that his government would keep energy prices at or around the rate of inflation, but has since admitted this is going to be difficult.
"When this budget comes down, it is going to impact on the cost of living, but we're keeping it to the absolute minimum so we retain a surplus," he told Fairfax radio.
"We'll hopefully retain our surplus but we're just tightening our belt."
With the cost of living set to rise, the importance of reviewing your tradesman income protection insurance requirements may also increase. After all, should you or a family member become unable to work due to injury or sickness, the financial ramifications could be enormous. Income protection offers 24/7 cover, so if you happen to become injured or sick outside of the workplace, you are still able to claim.
Furthermore, the premiums are usually tax deductible, which results in more affordable cover. This type of insurances enables you to receive up to 75 per cent of your earnings, which means you can continue to make mortgage payments, pay energy bills and cover other living expenses while recovering.
Energy charges could be particularly damaging in the near future, with Mr Barnett claiming taxpayers are cross-subsidising heavy electricity users.
He stated: "We'd like to eventually get to the position where electricity customers are actually paying for the cost of electricity. We're not there yet."
The premier also blamed the state's poor financial situation on volatile iron ore prices and the previously high Australian dollar.
Last year, Western Australia lost its AAA credit rating due to it becoming too reliant on resources royalties, which could become problematic if the mining boom continues to fade.