What To Do With A WorkCover Settlement Or Insurance Payout
Receiving a WorkCover settlement or insurance payout can significantly change your financial position. Understanding how to manage the money can help you make informed decisions about your immediate needs and longer-term financial security.
Planning for life after a WorkCover settlement or insurance payout
Receiving a WorkCover settlement or significant insurance payout can provide important financial security following an injury or illness, particularly if your ability to return to work or earn your previous income has been affected.
For some people, the payment may need to support them for many years. If your future earning capacity has been reduced, you may also have less opportunity to build wealth through employment income, superannuation contributions and regular investing.
The focus therefore should not simply be on how to invest the payout. It is important to consider how the money can support your immediate needs, provide a sustainable income and contribute to your longer-term financial security.
The key question is: “How can this money support my life if I can’t return to work in the way I previously expected?”
How can financial planning help after a WorkCover settlement or insurance payout?
A significant payout can change your financial circumstances quickly, but it does not necessarily resolve the longer-term financial challenges created by a reduced capacity to work.
A financial adviser can help you consider:
How much capital should remain readily accessible.
How much income the capital may realistically generate.
Whether debt should be reduced or eliminated.
How much could be invested for longer-term growth.
How investments should be structured.
How the payout may interact with superannuation and Centrelink entitlements, where relevant.
How much investment risk is appropriate for your circumstances.
How the capital could support your future lifestyle and retirement needs.
Where future employment income is uncertain or no longer available, protecting your capital and creating a sustainable source of income can become just as important as generating investment returns.
Can I rebuild my wealth after losing my ability to work?
This can be one of the most significant financial challenges following a serious injury or illness.
Over 20 or 30 years of employment, wealth may be built gradually through income, superannuation contributions, mortgage repayments and regular investing. If your capacity to work is significantly reduced, some of these wealth-building opportunities may also be reduced.
A WorkCover settlement or insurance payout can provide valuable financial resources, but careful planning is important when the money may need to support both your current and future needs.
Financial planning can help you determine:
What level of capital may be required to support your lifestyle.
How much you can reasonably afford to spend each year.
How much should remain invested for future needs.
The role investment returns may play in supporting your long-term position.
How your assets can be structured to support your needs over time.
The objective may no longer simply be to maximise wealth. It may be to protect the wealth you have and use it effectively to support you over the long term.
Financial advice for WorkCover settlements and insurance payouts
If you have received a WorkCover settlement or significant insurance payout, Barwon Financial Planning can help you develop a structured financial strategy for the years ahead.
We can help you understand what your capital may be able to provide, how much you can reasonably afford to spend, and how your money could be invested and structured to support your longer-term needs, particularly if returning to your previous level of employment may no longer be possible.
Talk To Us About Your WorkCover Settlement Or Insurance Payout
If you have received a significant payout and would like to understand your financial options, speak with our Geelong financial advisers about developing a strategy tailored to your circumstances.