Have you recently attained a number of quotes for income protection insurance and are unsure if you should go ahead? To help you make your decision, we’ve outlined some reasons you should go ahead and pay your premiums. Premiums are affected by a number of factors, but the main contributing factor is your income. If you believe that your income isn’t worth covering; it is useful to know that the pro’s far out weigh the cons. So in what circumstances is income protection insurance worth it? Here are some circumstances explored.
1. If your partner is unable to work
If your partner has a disability, meaning that they cannot work; or cannot find work due to a limited number of marketable skills, then it makes sense to insure your own income.
2. If you are a sole parent
Social security may provide a sort of safety net to ensure you don't starve, but if you have a mortgage and financial responsibilities, income protection insurance is very necessary.
3. Ongoing financial obligations
Income protection insurance can become important if you have financial responsibilities to your loved ones. These can include things like household bills, a mortgage or rent, credit card debt, personal loans and everyday living costs. The more financial responsibility you have, the greater the need for income protection insurance.
Wednesday, November 10, 2010
If you were to suddenly lose your income due to an injury or an illness that rendered you incapable of working, how long could you continue to support your household and maintain your mortgage and other commitments? For most people, whether they realise it or not, their most valuable asset is their ability to earn an income. Workers Compensation only covers you if you sustain an injury that is directly connected with work, but what if your injury happened at play, or if you couldn’t work because of illness? Most of the population could only go a month or two if their source of income was suddenly cut before their lifestyle would begin to suffer and their living conditions need to be altered significantly.
That’s where income protection can help. Income Protection Insurance ensures that you are not left financially devastated by illness or injury. It pays you up to 75% of your income until you recover or until the end of the benefit period. Talk to a consultant today and make sure you are fully covered to protect your biggest asset – your pay cheque.
That’s where income protection can help. Income Protection Insurance ensures that you are not left financially devastated by illness or injury. It pays you up to 75% of your income until you recover or until the end of the benefit period. Talk to a consultant today and make sure you are fully covered to protect your biggest asset – your pay cheque.
Income protection insurance provides peace of mind
Income protection insurance provides peace of mind, protecting your income in the unfortunate event that you become unable to work due to sickness or injury. The terms of your policy can be chosen to suit your individual circumstances, but most policies in Australia pay up to 75% of your gross salary and you are covered 7 days a week, anytime and anywhere in the world.
You can choose the duration of the benefit period, which can be anything from 2 years up to age 65 and you can also choose to be paid a lower monthly benefit should you not require the full 75%.
The price of the policy is dependent on a number of factors including the amount of your annual income, your age, gender and state of health, whether or not you smoke and what your occupation is. You can also choose a designated waiting period for the policy to start accruing the benefit which will also influence the cost of the policy.
You can choose the duration of the benefit period, which can be anything from 2 years up to age 65 and you can also choose to be paid a lower monthly benefit should you not require the full 75%.
The price of the policy is dependent on a number of factors including the amount of your annual income, your age, gender and state of health, whether or not you smoke and what your occupation is. You can also choose a designated waiting period for the policy to start accruing the benefit which will also influence the cost of the policy.
How Your Occupation Affects Your Income Protection Insurance
Most of us are at work for at least a third of our lifetimes (as if you could forget!), and our occupation has a significant impact on the likelihood of needing to make an income protection insurance claim. As such, life insurance companies usually use an occupation category or code as a factor in determining your premiums. Today we explore those occupation codes and the logic behind them a little more carefully.
What occupation categories exist?
This varies immensely by insurer. Some income protection companies have only 3 occupational categories, some have as many as 8. For instance, you might have to choose between:
• Manual
• Skilled Tradeperson
• Non-manual
Or you might have to be more specific about your skills and experience:
• Professional white collar workers whose job requires tertiary qualifications
• Medical and allied health professionals
• Clerical or administrative workers
• Light manual workers (for example, supervisors of manual workers)
• Fully qualified skilled tradespeople
• Unqualified tradespeople doing light or medium manual work
• Unqualified tradespeople doing heavy manual work
• Home duties
• Accountants are sometimes classified separately
What aspects of my income insurance does my occupation affect?
The most notable difference in income insurance between different occupations is the premium. However, there are also other factors that may be affected:
• Some occupational classes may not be eligible for as long benefit periods - for example, an income protection insurance plan might only offer a 2 or 5 year benefit for manual labourers compared to what is offered for office workers
• The maximum entry age may differ - if you're a heavy manual labourer you may only be able to get cover before a certain age, however this generally depends on the insurer.
• Some income protection insurance policies place more stringent 'disablement' requirements on occupation categories that trend towards manual labour. For example some insurers will pay certain occupations a benefit after the selected waiting period if they are either partially or totally disabled, whereas other occupations will only receive a benefit if they are totally disabled.
• There may be different maximum sums insured for different occupational categories
With all these points in mind, it is therefore best to talk to a financial adviser to find the most suitable income protection insurance policy for your situation.
What occupation categories exist?
This varies immensely by insurer. Some income protection companies have only 3 occupational categories, some have as many as 8. For instance, you might have to choose between:
• Manual
• Skilled Tradeperson
• Non-manual
Or you might have to be more specific about your skills and experience:
• Professional white collar workers whose job requires tertiary qualifications
• Medical and allied health professionals
• Clerical or administrative workers
• Light manual workers (for example, supervisors of manual workers)
• Fully qualified skilled tradespeople
• Unqualified tradespeople doing light or medium manual work
• Unqualified tradespeople doing heavy manual work
• Home duties
• Accountants are sometimes classified separately
What aspects of my income insurance does my occupation affect?
The most notable difference in income insurance between different occupations is the premium. However, there are also other factors that may be affected:
• Some occupational classes may not be eligible for as long benefit periods - for example, an income protection insurance plan might only offer a 2 or 5 year benefit for manual labourers compared to what is offered for office workers
• The maximum entry age may differ - if you're a heavy manual labourer you may only be able to get cover before a certain age, however this generally depends on the insurer.
• Some income protection insurance policies place more stringent 'disablement' requirements on occupation categories that trend towards manual labour. For example some insurers will pay certain occupations a benefit after the selected waiting period if they are either partially or totally disabled, whereas other occupations will only receive a benefit if they are totally disabled.
• There may be different maximum sums insured for different occupational categories
With all these points in mind, it is therefore best to talk to a financial adviser to find the most suitable income protection insurance policy for your situation.
Self Employment and Income Protection Insurance Explained
Those of us who are self-employed understand that in addition to all the benefits - such as freedom, control, self-determination and wearing your PJs to work occasionally - there are also some unexpected drawbacks! One of the infrequent, but not insignificant drawbacks is the effort it takes to obtain financial services. Tax is more difficult, getting a loan can be near impossible, and insurance policies also tend to be more involved. However, income protection insurance is more essential for the self-employed than any other income-earning group, so today we help demystify it.
The Basics
Most of the advice that exists about income protection insurance for ordinary employees also applies to the self-employed. For example:
• The maximum cover level is still set at 75% of your regular income
• You will need to select a waiting period
• You still need to choose between stepped and level premiums
• You'll still need to decide whether an agreed value policy or an indemnity policy will work best for you
Agreed Value or Indemnity Policy?
The choice between agreed value and indemnity policies is more critical with income protection insurance for the self-employed. In short, your best choice will be determined by your particular circumstances. So, if:
Your income varies wildly from month to month: Go with an agreed value policy; if an accident occurs in a down time you could be left with no payout.
Your income is fairly stable: An indemnity policy is cheaper, and if you can rely on your income to remain steady you can rely on the policy to pay out a reasonable amount. If you want extra peace of mind, though, it would also be reasonable to choose an agreed value.
You expect your income to rise: You should consider an indemnity policy; they are cheaper initially and with your income only on the up it means there is less possibility of you earning less than your sum insured.
Basic Income Protection or Business Expenses Cover?
Many income protection insurers offer an additional option for self-employed people - it may be called 'Business Overheads Cover' or ‘Business Expenses Cover’.
This option will be important for those who have mortgaged an office, or who have high additional fixed overheads that will be incurred even if you aren’t working. However, in most policies the business overheads are an additional benefit the policy may cover.
A Business Expenses Insurance benefit is specifically designed for self-employed individuals (employed full-time) who need to ensure that the fixed expenses of their business or practice will still be paid even if they cannot work due to injury or sickness. The benefit covers business expenses less any amounts reimbursed from elsewhere. You can purchase this cover on its own or together with an income protection insurance policy.
Business Expenses Insurance generally covers things like accounting fees, rent & property taxes, leasing costs of plant and equipment, salaries and associated costs, utilities and phone costs. It does not cover salaries or bonuses paid to yourself, capital costs, real estate depreciation, investment losses, or repayment of principal of any loan or other finance agreement.
The Basics
Most of the advice that exists about income protection insurance for ordinary employees also applies to the self-employed. For example:
• The maximum cover level is still set at 75% of your regular income
• You will need to select a waiting period
• You still need to choose between stepped and level premiums
• You'll still need to decide whether an agreed value policy or an indemnity policy will work best for you
Agreed Value or Indemnity Policy?
The choice between agreed value and indemnity policies is more critical with income protection insurance for the self-employed. In short, your best choice will be determined by your particular circumstances. So, if:
Your income varies wildly from month to month: Go with an agreed value policy; if an accident occurs in a down time you could be left with no payout.
Your income is fairly stable: An indemnity policy is cheaper, and if you can rely on your income to remain steady you can rely on the policy to pay out a reasonable amount. If you want extra peace of mind, though, it would also be reasonable to choose an agreed value.
You expect your income to rise: You should consider an indemnity policy; they are cheaper initially and with your income only on the up it means there is less possibility of you earning less than your sum insured.
Basic Income Protection or Business Expenses Cover?
Many income protection insurers offer an additional option for self-employed people - it may be called 'Business Overheads Cover' or ‘Business Expenses Cover’.
This option will be important for those who have mortgaged an office, or who have high additional fixed overheads that will be incurred even if you aren’t working. However, in most policies the business overheads are an additional benefit the policy may cover.
A Business Expenses Insurance benefit is specifically designed for self-employed individuals (employed full-time) who need to ensure that the fixed expenses of their business or practice will still be paid even if they cannot work due to injury or sickness. The benefit covers business expenses less any amounts reimbursed from elsewhere. You can purchase this cover on its own or together with an income protection insurance policy.
Business Expenses Insurance generally covers things like accounting fees, rent & property taxes, leasing costs of plant and equipment, salaries and associated costs, utilities and phone costs. It does not cover salaries or bonuses paid to yourself, capital costs, real estate depreciation, investment losses, or repayment of principal of any loan or other finance agreement.
What Happens Under My Term Life Insurance, Income Protection and Trauma Insurance Policies if I am diagnosed with Cancer?
As a group of diseases, cancer is one of the leading causes of disablement and death in Australia. Term life insurance, income protection and trauma insurance companies are all well-versed in handling claims due to cancer - today we look at what is likely to happen after a diagnosis of cancer if you hold any of the above policies.
Term life insurance
Most policies will pay out a lump sum on the diagnosis of a terminal illness where your life expectancy is less than 12 months. Some insurance companies may require you to visit a doctor employed by the life company to confirm your diagnosis.
income protection insurance
Upon diagnosis you may be required to provided a medical certificate from your doctor stating the period for which you were unable to work due to illness from cancer, or cancer treatment Benefits will start being paid as long as you are still suffering sickness from cancer, or needing cancer treatment and unable to work, or until your benefit period runs out.
Trauma insurance
For most insurers Australia-wide, cancer is a condition where the majority of claims are paid.
There are some special conditions with cancer payouts, mostly relating to the severity of the illness. For example, most diagnoses of malignant cancers will generally warrant a claim of the full covered amount under your trauma insurance policy. However, depending on the Life Insurance Company, diagnoses of benign tumors or carcinoma in situ (a precursor of malignant or invasive cancers) may only warrant a partial claim.
Nonetheless you need to be aware that you are only covered for conditions defined in your policies PDS (product disclosure statement). Each policy may have varied definitions relating to cancer. You should always make sure that you fully understand the insurance cover you have taken out has adequate cover for your needs.
Term life insurance
Most policies will pay out a lump sum on the diagnosis of a terminal illness where your life expectancy is less than 12 months. Some insurance companies may require you to visit a doctor employed by the life company to confirm your diagnosis.
income protection insurance
Upon diagnosis you may be required to provided a medical certificate from your doctor stating the period for which you were unable to work due to illness from cancer, or cancer treatment Benefits will start being paid as long as you are still suffering sickness from cancer, or needing cancer treatment and unable to work, or until your benefit period runs out.
Trauma insurance
For most insurers Australia-wide, cancer is a condition where the majority of claims are paid.
There are some special conditions with cancer payouts, mostly relating to the severity of the illness. For example, most diagnoses of malignant cancers will generally warrant a claim of the full covered amount under your trauma insurance policy. However, depending on the Life Insurance Company, diagnoses of benign tumors or carcinoma in situ (a precursor of malignant or invasive cancers) may only warrant a partial claim.
Nonetheless you need to be aware that you are only covered for conditions defined in your policies PDS (product disclosure statement). Each policy may have varied definitions relating to cancer. You should always make sure that you fully understand the insurance cover you have taken out has adequate cover for your needs.
7 Watchpoints When Comparing Income Protection Insurance
Comparing income protection insurance can be difficult even for experts. Most people feel that they simply don't have the time to properly review every Product Disclosure Statement or Policy Document ... and this can put you in a dangerous position. Today we make the comparison and choice process far easier, continuing our list of critical watch-points when buying income protection insurance. Check these items off your list, and you can be assured that you won't be caught unawares.
1. What benefit periods are available?
You should be able to choose between a range of benefit periods (with standard lengths including 2 years, 5 years, and to age 65) with good income protection insurance companies. Companies that offer benefits to age 65 will naturally be more expensive.
2. Does the policy offer premium waiver while on claim?
Good income protection insurance policies will waive your premiums while you’re on claim, and will not require you to pay premiums. Good quality policies won't require you to pay extra for this feature.
3. Does the policy cover 'Totally Disabled' and 'Partially Disabled'?
Most income protection insurance policies cover 'Partial Disability' and ‘Total Disability’ however definitions will vary between insurers. If you work in a slightly more hazardous occupation you may decide that your policy will need exceptional ‘Partial Disability’ and ‘Total Disability’ definitions. Check the product disclosure statement’s to compare these definitions and find out which suits your needs best..
4. Is there a time limit of Partial Disability payments?
There is no time limit as such, as partial disability payments are paid according to your benefit period as outlined in your policy. Benefit periods can vary, however they are usually either 2 years, 5 years, or until age 65. In comparison, some general insurance policies pay a benefit for a limited period of time only.
5. Are rehabilitation benefits available?
If you live paycheck to paycheck, your finances may not cope with the additional medical expenses incurred because of injury or illness. Income protection insurance policies with rehabilitation benefits can help.
6. What sort of exclusions exist for the policy?
Most income protection insurance policies will not pay claims for injuries or illnesses that are considered to be self-inflicted, occurred while conducting an illegal activity, were a result of military service or of normal pregnancy or childbirth. These exclusions are actually in your interests - claims paid for these reasons would eventually drive up premiums for every customer insured with the company.
7. How are psychological conditions treated?
Psychological conditions are not treated any differently when compared with other illnesses or injuries. It all really depends on whether your policy covers this or not. You can find out if psychological conditions are covered by reading the product disclosure statement; be on the look-out for words like mental health or mental illness. If you believe you do not need this feature in your income protection policy, some insurers offer premium discounts if you are happy to have a mental health exclusion placed on your policy.
1. What benefit periods are available?
You should be able to choose between a range of benefit periods (with standard lengths including 2 years, 5 years, and to age 65) with good income protection insurance companies. Companies that offer benefits to age 65 will naturally be more expensive.
2. Does the policy offer premium waiver while on claim?
Good income protection insurance policies will waive your premiums while you’re on claim, and will not require you to pay premiums. Good quality policies won't require you to pay extra for this feature.
3. Does the policy cover 'Totally Disabled' and 'Partially Disabled'?
Most income protection insurance policies cover 'Partial Disability' and ‘Total Disability’ however definitions will vary between insurers. If you work in a slightly more hazardous occupation you may decide that your policy will need exceptional ‘Partial Disability’ and ‘Total Disability’ definitions. Check the product disclosure statement’s to compare these definitions and find out which suits your needs best..
4. Is there a time limit of Partial Disability payments?
There is no time limit as such, as partial disability payments are paid according to your benefit period as outlined in your policy. Benefit periods can vary, however they are usually either 2 years, 5 years, or until age 65. In comparison, some general insurance policies pay a benefit for a limited period of time only.
5. Are rehabilitation benefits available?
If you live paycheck to paycheck, your finances may not cope with the additional medical expenses incurred because of injury or illness. Income protection insurance policies with rehabilitation benefits can help.
6. What sort of exclusions exist for the policy?
Most income protection insurance policies will not pay claims for injuries or illnesses that are considered to be self-inflicted, occurred while conducting an illegal activity, were a result of military service or of normal pregnancy or childbirth. These exclusions are actually in your interests - claims paid for these reasons would eventually drive up premiums for every customer insured with the company.
7. How are psychological conditions treated?
Psychological conditions are not treated any differently when compared with other illnesses or injuries. It all really depends on whether your policy covers this or not. You can find out if psychological conditions are covered by reading the product disclosure statement; be on the look-out for words like mental health or mental illness. If you believe you do not need this feature in your income protection policy, some insurers offer premium discounts if you are happy to have a mental health exclusion placed on your policy.
Income Protection Insurance - Not for Unemployment!
The internet has made life very easy in a lot of ways. However, it has also created a lot of confusion! Much of the insurance discussion available on the net is US- or UK-based, and our Australian insurance industry is quite different. Today we check out a common misconception when buying income protection insurance - that it will cover you for unemployment.
What does income protection insurance actually cover?
Overseas, income protection cover will often cover you for involuntary unemployment. While the taglines or advertisements for different policies might say "What would happen to you if you were unable to work?", they actually mean "What would happen if you were unable to work due to your own sickness or injury?".
Income protection insurance policies are similar to the old ‘sickness & accident’ type policies; however there are some key differences. Income protection policies have a set benefit period of usually 2 years, 5 years or until age 65. Whereas most of the ‘sickness & accident’ policies had life time benefits and therefore paid until you passed away!
What doesn't income protection insurance cover?
In Australia, income protection insurance doesn't cover:
• Redundancy
• Being fired
• Being unable to work due to carer obligations (a sick child, for example)
• Being unable to work for any other reason (for example, loss of transport)
What insurance does cover unemployment?
Some mortgage protection policies may have involuntary unemployment clauses, although of course it will only be your mortgage repayments that are covered, not general living expenses. These types of policies often offer very limited benefit periods of 3 or 6 months.
So is income protection insurance still worthwhile?
Yes! It may not cover involuntary unemployment, but it does cover you for the far more serious and usually much longer-lasting implications of illnesses and accidents. Government benefits are usually woefully inadequate, and for those with any debts or obligations, standard income protection insurance can be a lifesaver.
What does income protection insurance actually cover?
Overseas, income protection cover will often cover you for involuntary unemployment. While the taglines or advertisements for different policies might say "What would happen to you if you were unable to work?", they actually mean "What would happen if you were unable to work due to your own sickness or injury?".
Income protection insurance policies are similar to the old ‘sickness & accident’ type policies; however there are some key differences. Income protection policies have a set benefit period of usually 2 years, 5 years or until age 65. Whereas most of the ‘sickness & accident’ policies had life time benefits and therefore paid until you passed away!
What doesn't income protection insurance cover?
In Australia, income protection insurance doesn't cover:
• Redundancy
• Being fired
• Being unable to work due to carer obligations (a sick child, for example)
• Being unable to work for any other reason (for example, loss of transport)
What insurance does cover unemployment?
Some mortgage protection policies may have involuntary unemployment clauses, although of course it will only be your mortgage repayments that are covered, not general living expenses. These types of policies often offer very limited benefit periods of 3 or 6 months.
So is income protection insurance still worthwhile?
Yes! It may not cover involuntary unemployment, but it does cover you for the far more serious and usually much longer-lasting implications of illnesses and accidents. Government benefits are usually woefully inadequate, and for those with any debts or obligations, standard income protection insurance can be a lifesaver.
Income Protection Insurance and Middle Age - Do You Still Need It?
Given that income protection cover is usually advised for people who have dependants or large debts, like a mortgage, is it really necessary to keep that income protection cover that you bought decades ago when the world was much busier and your household was very different? A lot of the time, it is. If you're over 55 and still in the workforce, here's why income protection insurance is a smart buy.
Retirement plans
In middle age, you probably have quite a bit of equity in your home, and your mind is turning to all the things you'll be able to do in retirement. An injury or illness has the potential to put a bomb underneath your finances, and put your retirement plans on hold.
Care in old age
As senior citizens, assistance with various aspects of your health is frequently necessary. Having your savings eaten away in middle age by a late injury or illness can compromise your ability to look after yourself in the future.
Can your family care for you?
Many families today have increasing pressure in terms of living space and the cost of housing, the cost of food and living in general. If you develop a health condition that means you'll require regular care and attendance, it may simply not be possible for your family to take care of you, no matter how much they'd like to. If your children and their partners all need to hold down full-time jobs, it may be necessary to pay for expensive in-home care.
Health and aging
Unfortunately, increasing age is a major risk factor for many serious illnesses, including:
• Heart disease
• Diabetes
• Kidney problems
• Arthritis
• Many types of cancer
• Depression
• Osteoporosis
• Ulcers
Any of these illnesses has the potential to put you off work for quite a while ... and your income protection insurance cover could become a savior during that time!
Retirement plans
In middle age, you probably have quite a bit of equity in your home, and your mind is turning to all the things you'll be able to do in retirement. An injury or illness has the potential to put a bomb underneath your finances, and put your retirement plans on hold.
Care in old age
As senior citizens, assistance with various aspects of your health is frequently necessary. Having your savings eaten away in middle age by a late injury or illness can compromise your ability to look after yourself in the future.
Can your family care for you?
Many families today have increasing pressure in terms of living space and the cost of housing, the cost of food and living in general. If you develop a health condition that means you'll require regular care and attendance, it may simply not be possible for your family to take care of you, no matter how much they'd like to. If your children and their partners all need to hold down full-time jobs, it may be necessary to pay for expensive in-home care.
Health and aging
Unfortunately, increasing age is a major risk factor for many serious illnesses, including:
• Heart disease
• Diabetes
• Kidney problems
• Arthritis
• Many types of cancer
• Depression
• Osteoporosis
• Ulcers
Any of these illnesses has the potential to put you off work for quite a while ... and your income protection insurance cover could become a savior during that time!
Thursday, April 29, 2010
Why Income Protection Insurance is a Must
You work for a living. You work so you can pay the mortgage, run a car, put the kids in school and meet all those other day to day expenses.
But what if you couldn’t work? What if the income stopped?
It won’t happen, will it! But it just might.
Unfortunately, it does happen to some people and there is the chance that you just might fall into that category through no fault of your own. You may get hit by the proverbial bus or you may suffer a severe and debilitating disease which takes you out of the workforce for some time. There are plenty of statistics to show that the chances of something happening to you to prevent you working and earning an income for a period are pretty high.
In that instance – who will pay the bills? The sad fact is that most people automatically assume that they will be ‘right’ either by not suffering a health or accident mishap or that someone else will help them out financially.
For example, Medicare and your health insurance will only pay some of your health bills. You can’t always depend on the family and friends to pay the bills and going into debt can be uncertain. Also, you never want to sell the family home just to keep paying the other bills. It is about maintaining a standard of living.
Income Protection Cover
Well, income protection can help. With income protection, you can receive a regular income of up to 75% of your pre-event income until you go back to work. For many, that can mean a short term, and for others, it can be almost a lifetime.
Income Protection Insurance is a Must
That is why income protection insurance is important for all age groups. Even for the person first starting out at work. They may work until they retire or they may only work one day. If an accident happens at the start of your working life, an income protection insurance policy can help you through the next stages.
It is all about protecting your greatest asset – your ability to earn an income. Most people overlook this fact and immediately see their key assets as being a house or car. But you can’t maintain either if the income stream stops.
How much Income Protection Insurance do you need?
The most frequently asked question therefore is how much income protection insurance do I need.
This is generally assumed to be sufficient to pay the mortgage and other debts. But it is much more than that. Not having income protection insurance is only part of the underinsurance gap. Not having sufficient protection to maintain a lifestyle is a big part of the ‘gap’.
It’s an Investment
Income protection insurance shouldn’t be seen as a cost. It really is an investment. If you don’t use it then you lose. If you are unfortunate to suffer a health setback and you do have income protection insurance, then you are financially ahead.
Find the right Income Protection Insurance policy for you
If you need money to cover your expenses during extended leave from work due to sickness or injury, you can bridge the gap with Income Protection Insurance. The funds from income protection cover can help pay for bills and living expenses. Make sure you compare income protection quotes properly and seek financial advice.
But what if you couldn’t work? What if the income stopped?
It won’t happen, will it! But it just might.
Unfortunately, it does happen to some people and there is the chance that you just might fall into that category through no fault of your own. You may get hit by the proverbial bus or you may suffer a severe and debilitating disease which takes you out of the workforce for some time. There are plenty of statistics to show that the chances of something happening to you to prevent you working and earning an income for a period are pretty high.
In that instance – who will pay the bills? The sad fact is that most people automatically assume that they will be ‘right’ either by not suffering a health or accident mishap or that someone else will help them out financially.
For example, Medicare and your health insurance will only pay some of your health bills. You can’t always depend on the family and friends to pay the bills and going into debt can be uncertain. Also, you never want to sell the family home just to keep paying the other bills. It is about maintaining a standard of living.
Income Protection Cover
Well, income protection can help. With income protection, you can receive a regular income of up to 75% of your pre-event income until you go back to work. For many, that can mean a short term, and for others, it can be almost a lifetime.
Income Protection Insurance is a Must
That is why income protection insurance is important for all age groups. Even for the person first starting out at work. They may work until they retire or they may only work one day. If an accident happens at the start of your working life, an income protection insurance policy can help you through the next stages.
It is all about protecting your greatest asset – your ability to earn an income. Most people overlook this fact and immediately see their key assets as being a house or car. But you can’t maintain either if the income stream stops.
How much Income Protection Insurance do you need?
The most frequently asked question therefore is how much income protection insurance do I need.
This is generally assumed to be sufficient to pay the mortgage and other debts. But it is much more than that. Not having income protection insurance is only part of the underinsurance gap. Not having sufficient protection to maintain a lifestyle is a big part of the ‘gap’.
It’s an Investment
Income protection insurance shouldn’t be seen as a cost. It really is an investment. If you don’t use it then you lose. If you are unfortunate to suffer a health setback and you do have income protection insurance, then you are financially ahead.
Find the right Income Protection Insurance policy for you
If you need money to cover your expenses during extended leave from work due to sickness or injury, you can bridge the gap with Income Protection Insurance. The funds from income protection cover can help pay for bills and living expenses. Make sure you compare income protection quotes properly and seek financial advice.
Who has the best income protection insurance policy in Australia?
Income protection insurance has been available in Australia for a number of decades. It pays up to 75% of your income if you become sick or injured for a period of time. Income protection insurance offers financial security by giving you funds to pay for living expenses and bills while you recover.
In Australia, there is no such thing as ‘the best income protection insurance policy’ as touted by a number of life insurance companies. There are only policies that may suit your particular situation and needs more so than others. This is because each life insurance company has different definitions, different income protection insurance products, and also because everyone’s situation is different.
How do I decide on the best income protection insurance policy for my situation?
There are a number of factors you should consider to determine which income protection insurance policy is best for you.
1. Types of income protection policies – there are two main types of income protection insurance policies. These include indemnity value income protection, and agreed value income protection. Indemnity value income protection is where you must prove your income at claim time. Agreed value income protection is where you must prove your income at application time. There are pro’s and con’s in choosing either type, so be sure to speak to your financial adviser.
2. Waiting period – this is the amount of time you are willing to wait until your income protection benefits begin to be paid. This period of time is typically 14 days, but can also be 30, 60, or 90 days.
3. Benefit period – this refers to the maximum amount of time you can receive your income protection benefit payments. This length of time is usually 2 years, 5 years, or till age 65.
Should I get help in choosing the best income protection insurance policy for me?
In short, yes you should. Financial advisers can offer priceless information on income protection insurance products in Australia. Getting help from a financial adviser can also help ensure you pay lower premiums without compromising on the quality of cover.
Financial advisers are found throughout Australia, whose businesses are conducted in person, online or over the phone. A financial adviser can help you shop around, compare like with like, and give you suggestion on which income protection policies is best for your situation.
In Australia, there is no such thing as ‘the best income protection insurance policy’ as touted by a number of life insurance companies. There are only policies that may suit your particular situation and needs more so than others. This is because each life insurance company has different definitions, different income protection insurance products, and also because everyone’s situation is different.
How do I decide on the best income protection insurance policy for my situation?
There are a number of factors you should consider to determine which income protection insurance policy is best for you.
1. Types of income protection policies – there are two main types of income protection insurance policies. These include indemnity value income protection, and agreed value income protection. Indemnity value income protection is where you must prove your income at claim time. Agreed value income protection is where you must prove your income at application time. There are pro’s and con’s in choosing either type, so be sure to speak to your financial adviser.
2. Waiting period – this is the amount of time you are willing to wait until your income protection benefits begin to be paid. This period of time is typically 14 days, but can also be 30, 60, or 90 days.
3. Benefit period – this refers to the maximum amount of time you can receive your income protection benefit payments. This length of time is usually 2 years, 5 years, or till age 65.
Should I get help in choosing the best income protection insurance policy for me?
In short, yes you should. Financial advisers can offer priceless information on income protection insurance products in Australia. Getting help from a financial adviser can also help ensure you pay lower premiums without compromising on the quality of cover.
Financial advisers are found throughout Australia, whose businesses are conducted in person, online or over the phone. A financial adviser can help you shop around, compare like with like, and give you suggestion on which income protection policies is best for your situation.
Income Protection Insurance Australia
Income protection insurance is one of Australia’s major types of personal insurance available. It typically pays up to 75% of your income should you fall ill or become injured.
Income protection insurance Australia cost factors
Premiums will vary between life insurance companies depending on your situation.
These premiums are affected by a number of factors, and these factors should be taken into consideration when comparing income protection policies.
Here we have listed a few considerations for you to take into account when looking into income protection.
1. What type of income protection policy in Australia should you choose?
There are two main types of income protection policies available in Australia. You can a choice of choosing between an agreed value policy or an indemnity value policy. There are differences to each type, and both come with pros and cons depending on your particular situation.
For example, an agreed value income protection policy might be more suitable for a self-employed person whose income is more likely to fluctuate.
2. Which income protection ‘waiting periods’ are available in Australia?
The waiting period refers to the amount of time you are willing to wait until your benefits start being accrued to you. The standard waiting period is 30, 60 or 90 days, however you may extend this out to 180, 360 or 2 years as this suits.
The main rule of thumb in determining which waiting period is best for you, is to calculate the days of sick leave you have, plus the amount of savings you can use to live on.
3. How long should your Australian income protection insurance ‘benefit period’ be?
The ‘benefit period’ outlined in an income protection policy’s product disclosure statement (PDS) refers to the maximum length of time you can claim on your income protection insurance. This length of time is usually 2 years, 5 years or up to 65 years.
Advice on income protection insurance Australia
If you need advice on income protection insurance Australia speak to a qualified financial adviser. An experienced financial adviser can compare income protection insurance policies Australia and offer free income protection quotes
Income protection insurance Australia cost factors
Premiums will vary between life insurance companies depending on your situation.
These premiums are affected by a number of factors, and these factors should be taken into consideration when comparing income protection policies.
Here we have listed a few considerations for you to take into account when looking into income protection.
1. What type of income protection policy in Australia should you choose?
There are two main types of income protection policies available in Australia. You can a choice of choosing between an agreed value policy or an indemnity value policy. There are differences to each type, and both come with pros and cons depending on your particular situation.
For example, an agreed value income protection policy might be more suitable for a self-employed person whose income is more likely to fluctuate.
2. Which income protection ‘waiting periods’ are available in Australia?
The waiting period refers to the amount of time you are willing to wait until your benefits start being accrued to you. The standard waiting period is 30, 60 or 90 days, however you may extend this out to 180, 360 or 2 years as this suits.
The main rule of thumb in determining which waiting period is best for you, is to calculate the days of sick leave you have, plus the amount of savings you can use to live on.
3. How long should your Australian income protection insurance ‘benefit period’ be?
The ‘benefit period’ outlined in an income protection policy’s product disclosure statement (PDS) refers to the maximum length of time you can claim on your income protection insurance. This length of time is usually 2 years, 5 years or up to 65 years.
Advice on income protection insurance Australia
If you need advice on income protection insurance Australia speak to a qualified financial adviser. An experienced financial adviser can compare income protection insurance policies Australia and offer free income protection quotes
Income Protection Calculators
Income protection insurance is a vital part of any financial plan, so it worthwhile doing your research to find the most competitive premium without compromising on the quality of cover.
What is Income Protection?
In Australia, income protection insurance pays a monthly benefit up to 75% of your salary from personal exertion should you become ill or injured. Your monthly benefits are accrued after your selected waiting period, usually 14, 30, 60 or 90 days or up to 2 years.
The income derived from the following is usually not defined as ‘income’ under a typical income protection policy: overtime payments, bonuses, penalty or shift allowances, investment income, income received from deferred compensation plans, disability income policies, commissions, retirement plans or income not derived from non-vocational activities.
Types of Income Protection Calculators
There are a number of Income Protection Calculators available on the internet through various providers who either compare or offer income protection insurance.
There are two main types of income protection calculators available online:
1. Cost of living calculator – this type of calculator helps you calculate the living costs you may accrue over a one month period.
2. Value of cover calculator – this type of calculator calculates 75% of your salary.
Both types of income protection calculators only offer an estimation of either how much you should be covered for, or how much you might pay monthly in premiums. The key word here is ‘estimation’ – income protection calculators will only give you a rough idea of how much income protection insurance ‘might’ cost you.
Should you use income protection calculators?
There are a number of factors that online calculators assume, factors that can increase or decrease the monthly income protection premiums you might pay. These factors assumes include things like:
• Not including your sick leave to calculate your waiting period
• Calculating your sick leave at the full rate of pay
• Not taking into account your age, gender or occupation
• Generally use ‘clerk’ occupation rates which only cover a small percentage of people
In reality, a life insurance company will calculate your premium by assessing your entire personal exertion income. Therefore your premium will always vary, and a life insurance company might also apply premium loadings and exclusions depending on your particular situation, occupation and medical history.
When considering income protection insurance, income protection calculators should not be relied upon for the purpose of making a decision.
Get financial advice on income protection
You should consider obtaining advice from a financial adviser before making any final decisions. You should not make a decision on income protection insurance based solely on income protection calculators.
Getting financial advice on income protection is always valuable. A qualified and experienced financial adviser, particularly one who specialises in personal insurance and risk management, can help you find the right income protection policy by comparing multiple income protection policies from different life insurance companies and finding the most competitive premium for you.
A financial adviser can also offer good advice on which type of income protection policy suits you (agreed value income protection or indemnity value income protection), and the pros and cons of having your income protection policy inside or outside of your superannuation fund.
What is Income Protection?
In Australia, income protection insurance pays a monthly benefit up to 75% of your salary from personal exertion should you become ill or injured. Your monthly benefits are accrued after your selected waiting period, usually 14, 30, 60 or 90 days or up to 2 years.
The income derived from the following is usually not defined as ‘income’ under a typical income protection policy: overtime payments, bonuses, penalty or shift allowances, investment income, income received from deferred compensation plans, disability income policies, commissions, retirement plans or income not derived from non-vocational activities.
Types of Income Protection Calculators
There are a number of Income Protection Calculators available on the internet through various providers who either compare or offer income protection insurance.
There are two main types of income protection calculators available online:
1. Cost of living calculator – this type of calculator helps you calculate the living costs you may accrue over a one month period.
2. Value of cover calculator – this type of calculator calculates 75% of your salary.
Both types of income protection calculators only offer an estimation of either how much you should be covered for, or how much you might pay monthly in premiums. The key word here is ‘estimation’ – income protection calculators will only give you a rough idea of how much income protection insurance ‘might’ cost you.
Should you use income protection calculators?
There are a number of factors that online calculators assume, factors that can increase or decrease the monthly income protection premiums you might pay. These factors assumes include things like:
• Not including your sick leave to calculate your waiting period
• Calculating your sick leave at the full rate of pay
• Not taking into account your age, gender or occupation
• Generally use ‘clerk’ occupation rates which only cover a small percentage of people
In reality, a life insurance company will calculate your premium by assessing your entire personal exertion income. Therefore your premium will always vary, and a life insurance company might also apply premium loadings and exclusions depending on your particular situation, occupation and medical history.
When considering income protection insurance, income protection calculators should not be relied upon for the purpose of making a decision.
Get financial advice on income protection
You should consider obtaining advice from a financial adviser before making any final decisions. You should not make a decision on income protection insurance based solely on income protection calculators.
Getting financial advice on income protection is always valuable. A qualified and experienced financial adviser, particularly one who specialises in personal insurance and risk management, can help you find the right income protection policy by comparing multiple income protection policies from different life insurance companies and finding the most competitive premium for you.
A financial adviser can also offer good advice on which type of income protection policy suits you (agreed value income protection or indemnity value income protection), and the pros and cons of having your income protection policy inside or outside of your superannuation fund.
How to safeguard your salary with income protection insurance
Your biggest asset is probably not your home, or superannuation balance. If you multiply your yearly salary by your years to retirement, you may be surprised by the large figure. For someone aged 25, 40 years earning $50,000 per year is a cool $2 million. Now that is definitely something worth protecting!
When you are healthy you probably think you don’t need insurance – but this is the best time to get it. Once you are sick you may not be able to get insurance at all or may be forced to pay much higher premiums.
What is Income Protection Insurance?
If you rely heavily on your income to meet regular expenses then you should have some form of income protection insurance.
Income protection insurance pays a monthly benefit, which can replace up to 75% of your income if you are unable to work due to injury or illness. It ensures that continue to meet your regular living expenses when you cannot work for extended periods of time.
Make sure you check the fine print outlined in the life insurance company’s product disclosure statement (PDS) as the details will vary from policy to policy. The most common benefit periods available in Australia are usually two to five years and payable to age 65.
Unlike trauma insurance, income protection insurance does not specify a list of medical conditions. This means you can often get better coverage, especially for medical conditions like back injuries and chronic fatigue.
Factors that may affect the level of income protection premiums you pay include:
1. Waiting Period
This is the period of time you need to wait before the benefit will start to be paid under the policy. There are standard waiting periods of usually 14, 30 and 90 days.
2. Claim benefit period
This is the length of time you will be paid in the event of a claim. This could be two or five years, or until age 65.
Generally speaking, if you choose a longer waiting period or benefit period, your premiums will usually be lower.
It is important to consider your financial commitments such as rent or mortgage and other debt payments when you choose these options. If you have accumulated sick leave, annual leave or long service leave, you may not need to claim immediately so you reduce the cost of your income protection insurance policy.
3. Taxation
Income protection is generally tax deductible, but always speak with your accountant or tax agent in relation to any tax advice.
When you are healthy you probably think you don’t need insurance – but this is the best time to get it. Once you are sick you may not be able to get insurance at all or may be forced to pay much higher premiums.
What is Income Protection Insurance?
If you rely heavily on your income to meet regular expenses then you should have some form of income protection insurance.
Income protection insurance pays a monthly benefit, which can replace up to 75% of your income if you are unable to work due to injury or illness. It ensures that continue to meet your regular living expenses when you cannot work for extended periods of time.
Make sure you check the fine print outlined in the life insurance company’s product disclosure statement (PDS) as the details will vary from policy to policy. The most common benefit periods available in Australia are usually two to five years and payable to age 65.
Unlike trauma insurance, income protection insurance does not specify a list of medical conditions. This means you can often get better coverage, especially for medical conditions like back injuries and chronic fatigue.
Factors that may affect the level of income protection premiums you pay include:
1. Waiting Period
This is the period of time you need to wait before the benefit will start to be paid under the policy. There are standard waiting periods of usually 14, 30 and 90 days.
2. Claim benefit period
This is the length of time you will be paid in the event of a claim. This could be two or five years, or until age 65.
Generally speaking, if you choose a longer waiting period or benefit period, your premiums will usually be lower.
It is important to consider your financial commitments such as rent or mortgage and other debt payments when you choose these options. If you have accumulated sick leave, annual leave or long service leave, you may not need to claim immediately so you reduce the cost of your income protection insurance policy.
3. Taxation
Income protection is generally tax deductible, but always speak with your accountant or tax agent in relation to any tax advice.
Cheap income protection insurance
Income protection insurance is great for individuals at any stage of life, whether you are male, female, have a family or are single. Income protection insures your greatest asset - your income.
If you have debts such as a mortgage, personal loans, bills, or rely on yourself to provide an income to survive, then cheap income protection insurance may very well be the answer for you.
In Australia, cheap income protection insurance provides up to 75% of your income should you become ill or injured.
Cheap income protection insurance for men
If you are the main breadwinner, or just providing for yourself, cheap income protection insurance is crucial for your well being and loved ones. Just imagine if you had to stop working due to an accident or sickness, how would you cope?
Cheap income protection insurance can help pay your mortgage, rent, and living expenses. It also offers peace of mind knowing that if something tragic was to happen, you and any loved ones would be equipped with income to cope financially.
Cheap income protection insurance for women
Like many Australian families, dual incomes are the only way for a family to not only survive, but strive in life. If your additional income helps your family to survive and pay for those ‘added extras’ like a second car, school fees and excursions, then income protection is also important for the working woman.
If you are a single career woman cheap income protection insurance is also important. Cheap income protection insurance can help you maintain your independence. So if you do happen to fall ill for a long period of time, cheap income protection insurance can help pay for your rent and any medical bills you have – you may not have to rely on family or friends during a stressful time that you should be using to recover.
Cheap income protection insurance for part-time workers
The number of part-time employees has increased in recent times, particularly for women. This may be due to the economic climate, or the increase in the cost of child care and long day care in Australia.
Cheap income protection insurance is also available for part-time employees. If you are aged between 19-50 next birthday, and working between 20 to 29 hours over three days per week, working in an insurable occupation, you’re more than likely eligible for cover.
Cheap income protection for the self-employed
Self-employed people don’t have sick leave or holiday leave to rely on. Other than eligible government benefits for sickness allowance there is no security for a self–employed person if they become sick or injured and are unable to continue working. Their business would stop running, instantly reducing income that would normally pay for bills and living expenses.
Cheap income protection provides up to 75% of your income (less business expenses) upon suffering from an injury or illness which keeps you off work for longer than your waiting period. This payment usually lasts until you have recovered sufficiently to go back to work, or up until the maximum specified benefit period.
Get advice on cheap income protection insurance
If you need advice on where to purchase cheap income protection insurance from, speak to your financial adviser. Your financial adviser may be able to compare many cheap income protection insurance policies from Australia. They may also help you deicide which waiting period suits your needs. The waiting period is the amount of time you have to wait before income protection insurance benefits are paid, usually 30, 60 or 90 days.
If you have debts such as a mortgage, personal loans, bills, or rely on yourself to provide an income to survive, then cheap income protection insurance may very well be the answer for you.
In Australia, cheap income protection insurance provides up to 75% of your income should you become ill or injured.
Cheap income protection insurance for men
If you are the main breadwinner, or just providing for yourself, cheap income protection insurance is crucial for your well being and loved ones. Just imagine if you had to stop working due to an accident or sickness, how would you cope?
Cheap income protection insurance can help pay your mortgage, rent, and living expenses. It also offers peace of mind knowing that if something tragic was to happen, you and any loved ones would be equipped with income to cope financially.
Cheap income protection insurance for women
Like many Australian families, dual incomes are the only way for a family to not only survive, but strive in life. If your additional income helps your family to survive and pay for those ‘added extras’ like a second car, school fees and excursions, then income protection is also important for the working woman.
If you are a single career woman cheap income protection insurance is also important. Cheap income protection insurance can help you maintain your independence. So if you do happen to fall ill for a long period of time, cheap income protection insurance can help pay for your rent and any medical bills you have – you may not have to rely on family or friends during a stressful time that you should be using to recover.
Cheap income protection insurance for part-time workers
The number of part-time employees has increased in recent times, particularly for women. This may be due to the economic climate, or the increase in the cost of child care and long day care in Australia.
Cheap income protection insurance is also available for part-time employees. If you are aged between 19-50 next birthday, and working between 20 to 29 hours over three days per week, working in an insurable occupation, you’re more than likely eligible for cover.
Cheap income protection for the self-employed
Self-employed people don’t have sick leave or holiday leave to rely on. Other than eligible government benefits for sickness allowance there is no security for a self–employed person if they become sick or injured and are unable to continue working. Their business would stop running, instantly reducing income that would normally pay for bills and living expenses.
Cheap income protection provides up to 75% of your income (less business expenses) upon suffering from an injury or illness which keeps you off work for longer than your waiting period. This payment usually lasts until you have recovered sufficiently to go back to work, or up until the maximum specified benefit period.
Get advice on cheap income protection insurance
If you need advice on where to purchase cheap income protection insurance from, speak to your financial adviser. Your financial adviser may be able to compare many cheap income protection insurance policies from Australia. They may also help you deicide which waiting period suits your needs. The waiting period is the amount of time you have to wait before income protection insurance benefits are paid, usually 30, 60 or 90 days.
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