“What is the most important insurance for your generation to have and why?”

Simple answer. But the problem is that insurance is the “great grudge purchase”. So, let’s set the scene.

Gen Xers are at an exciting, if exhausting, life stage. Marriage, mortgage and midgets (the triple Ms) have either happened, or are on the radar. Those who have so far dodged those bullets (Are you The Matrix?) probably still have a social life that makes up for the shortfall. Lucky buggers.

And then there’s the career. Gen Xers are becoming the power generation as they replace ageing Boomers.

Q: How do you fund the triple Ms? A: The career thing.

But what if you couldn’t – through illness or injury – work for an extended period? Could you keep your house? What of your current goals/dreams could you live out for yourselves and your kids?

Today’s answer is income protection insurance. Your ability to earn is your most valuable asset.

Here’s the weird thing. People happily spend $1000 a year insuring their $30,000 (average) car.

A 35-year-old earning $80k a year will earn $2.4 million by age 65. You can insure 75 per cent, so you’d receive $60k a year. The cost? Also about $1000. But it’s tax deductible!

A lost car might set you back two years. Being unable to work would financially destroy you and the family.

And don’t forget life, total and permanent disability and trauma insurances. They’re also designed to protect you and your family from financial devastation.

Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and a licensed financial adviser.