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.
Thursday, April 29, 2010
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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