Income Protection

Your income IS your most important asset.  But, if your income stops due to you being sick or injured, your bills don’t stop coming in.  In fact your expenses could actually be higher.  If this happened to you TODAY, could you afford it?

 

We talk about our home being our most valuable asset and many people rightly insure their homes in the event it burns down.  But, could you afford to keep your home if your income stopped?  Could your family afford to keep the home if you tragically died prematurely.

 

It only makes sound financial sense to protect your income the best you can.

How much income protection cover do I need?

All reputable income protection providers in Australia will offer cover to the value of 75% of your gross (before tax) income plus superannuation benefits.  If you wish to have less cover than this, then you can calculate exactly what you need by considering those key expenses you would need to pay for in the event you could not work, such as…

 

  • Mortgage or rent payments
  • Food
  • Utility bills
  • Personal loan/ car finance/ credit card payments
  • School fees/costs/excursions/uniforms
  • Other key costs such as home insurance etc

 

If you reduce your level of cover it may reduce your premium but that does not necessarily mean it is the right thing to do, so get advice first.  Get in touch here if you would like help.

How do I pick a good Income Protection Policy?

This is not so easy!  There are many, many different insurance companies in Australia offering income protection benefits now – and these companies offer an ever greater number of varying products.  Benefits, definitions, options, and premiums all vary greatly.

Beyond this, different insurance companies specialise in different market segments.  Insurance company A may be most appropriate to office workers between the ages of 35 and 50 due to certain definitions and premiums; whilst Insurance company B may be most appropriate to Engineers between the ages of 31 and 52.
Now, there are a few things to be mindful of when selecting an insurance company…

 

  • How long has the insurance company operated in Australia? The longer the better!!  This is because the longer an insurance company has operated in Australia, the more market and claims experience they have which means you are less likely to get an unexpected premium hike.
  • What is their claims process and service times?  If it comes to a claim, you will probably need your money quickly.  Again, this is where the older companies often shine because they have had a long time to develop their processes.
  • Are they a specialist in the field of insurance you want?  If you are ringing the same phone number to discuss life insurance, income protection, home insurance, health insurance, pet insurance, or even your groceries… then there is a fair chance that the insurance company does not specialise in the cover you are looking for.
  • Are you buying directly from the manufacturer or is the insurance company selling insurance that is actually a product of another insurance company and profiting from the exercise?