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Plus, and get 12 months cover for the price of 11 if you pay for Income protection annually. T&Cs apply.
Would you struggle to pay the bills if you had to take unexpected time off work? Income protection could help.
It's designed to step in and replace your income by up to 85% should you become sick or injured. You can just set up your monthly bill, and have peace of mind knowing you're covered if something happens.
Each policy will be slightly different, one policy could have a longer benefit period while another pays a higher percentage of your income. The below table shows online options available directly from Australian brands.
Income protection insurance is a financial safety net – it pays you a percentage of your wage, for a set period, if you're unable to work due to a sudden illness or injury.
So, if you're unlucky enough to have a serious car accident, and can't work for six months, you'd get regular payments from your insurer – meaning you could focus on getting better without falling behind on the bills.
For a monthly payment – usually around 1-2% of your salary – income protection insurance gives you peace of mind if you become too sick or injured to work.
Basically, income protection insurance covers your wage, or a percentage of it. Imagine you're stuck in hospital for six months, or you're recovering from major surgery and can't work. Income protection insurance would ensure you still get regular payments, so you can keep up with everyday expenses without getting into unnecessary debt.
How much you get paid, and for how long, will vary depending on which insurance policy you choose. You could take out a policy which pays 85% of your wage for five years, or you could take out a policy which pays 50% of your wage for six months. Both have their benefits; it's about what's right for you.
You can spend the money however you like, as it's just a replacement for your normal wage, but it's designed so you can continue paying your bills, avoid the stress of debt and cover any medical costs that you may incur.
The price of income protection insurance can vary depending on a number of factors, including how much you earn, the type of lifestyle you lead and how long you'd like to be covered for. Fill in your details below to get a good idea of how much income protection insurance is likely to cost you.
When looking for income protection insurance, there are a few important features that you should consider, and it's worth making sure you understand each one properly.
You can choose between two different types of income protection insurance: agreed value and indemnity value.
|Agreed value||The more expensive of the two, agreed value insurance guarantees you'll get a monthly benefit which was agreed upon at the start of your policy. It's particularly good for people who may have a fluctuating salary but want to be certain they'll get a set benefit.|
|Indemnity value||Cheaper and more common, indemnity value insurance doesn't necessarily guarantee you'll get the monthly payments you wanted when you bought your policy. If you make a claim, your insurance company will verify your income at that point in time – so if you've taken some time out, or the business you own has had a tough few months, you might not get exactly what you had in mind.|
If you earn a six-figure salary, you'll be able to get more income protection insurance than if you earned $60,000. Use our income protection insurance calculator to find out how much you could get in monthly payments, if you were suddenly put out of work.
Answer a few questions to get an estimate on how much income protection you might need
Answer a few questions to get an estimate on how much income protection you might need
Every income protection insurance policy will have its own exclusions, so it's really important that you read your product disclosure statement carefully.
As an example, exclusions could be anything from certain diseases, such as cancer, to injuries sustained while you were taking part in a dangerous pastime, like snowboarding. Pre-existing conditions may also be ruled out.
There will also be time restrictions on your policy. Insurers will enforce a waiting period, so you'll only be able to claim if your illness or injury keeps you out of work for a certain length of time. Usually, the waiting period is somewhere between two weeks and three months.
Insurance companies will also enforce a maximum benefit period, so you'll only be able to claim payments for a certain length of time, usually between two years and five years.
If you are made redundant, there is a range of insurance providers that offer redundancy cover as an optional extra when you purchase an income protection policy. Redundancy insurance can come in handy if you find yourself out of a job, giving you some short-term financial assistance to get by.
However, redundancy cover won't cover you if you resign. Usually, you need to meet your insurer's definition of involuntary redundancy, which can include the following:
Redundancy insurance can be helpful if you think there's a chance you'll be made redundant. Consider the work environment you are in and whether redundancies are common. You should also think about how easy it would be for you to find another job quickly. Check the waiting periods and no claim period on redundancy policies as well. If you do add it to your income protection cover, you don't want to be waiting a long time for a payment to be made.
A lot of people choose to get income protection insurance through their super fund because it's a quick and easy option. However, there are a couple of drawbacks you should be aware of before deciding if this is right for you.
First off, income protection insurance won't be as comprehensive if you get it through your super fund, compared to buying a standalone policy.
Secondly, while funding income protection insurance through your super might not feel like it's costing you anything now, it definitely is in the long run. Without going into the nitty gritty, your super is a pretty safe yet savvy investment, so the more money you leave in the fund, the better.
Besides, income protection insurance is tax deductible anyway, so you can add it to your tax return when it comes around to July. Hooray!
The cost of income protection insurance will vary depending on a number of factors, including your income, your lifestyle, and how much you'd like to be covered for, but it's typically around 1-2% of your average salary.
To give you a rough idea of how much you can expect to pay, we researched average costs across seven Australian brands. Results are based on a 35-year-old non-smoking office worker with no pre-existing conditions listed.
|Monthly income (pre tax)||Average cost per month (male)||Average cost per month (female)||Monthly payout range|
|$6,000||$47.33||$66.60||$4,500 - $5,000|
|$10,000||$72.23||$101.34||$7,500 - $8,000|
Prices and benefit payouts are based on a 35-year-old, non-smoking office worker with no pre-existing conditions listed. Quotes checked across 8 brands in December 2019.
It's important to note that your income protection insurance won't provide any benefits if you die suddenly, so if you're killed in a car crash or suffer a fatal heart attack, you won't receive any payments from your insurance policy.
However, some insurers do provide a death benefit if you die while already claiming from your policy. This means that if you're diagnosed with a terminal illness and begin claiming from your income protection policy, but die 12 months later, you would receive a lump sum.
If you want your insurance policy to offer a payout for sudden death, you may want to consider life insurance in addition to income protection insurance.
A number of insurers offer income protection cover in Australia.
|Virgin||Virgin Money won the Best Income Protection category in the 2019 Finder Awards|
|AAMI||2.8 million Australians have trusted AAMI for their income protection insurance|
|NobleOak||NobleOak offers extensive income protection of up to $25,000 a month|
|Medibank||Medibank focuses on affordability and flexibility|
|nib||nib is one of the few insurers which will pay 85% of your income|
|TAL||TAL has a death benefit which offers a $50,000 lump sum|
|Zurich||Zurich offers worldwide cover and is a good option for those who travel frequently|
|Insuranceline||Insuranceline has a generous maximum payout period of five years|
Income protection policies offer both built-in and additional benefits to give you optimal protection in the event of serious illness or injury. Some of these benefits include the following:
|Benefit||How it works|
|Trauma event benefit||A lump-sum benefit for trauma conditions that are specified in your policy|
|Death benefit||A lump-sum benefit in the event you pass away|
|Needle-stick injury benefit||This will pay a benefit if through the course of your occupation, you become infected with HIV, AIDS, Hepatitis B or Hepatitis C as a result of a needle-stick injury or splash injury|
|Bed confinement benefit||A portion of your monthly benefit is paid for each day that you are confined to bed and require the full-time care of a registered nurse|
|Accommodation benefit||Will reimburse an immediate family member's accommodation costs if that family member travels over a specified distance to stay with you|
|Family care benefit||Will pay a benefit if a member of your family is forced to take time off of work to care for you and suffers a reduction in their income as a result|
|Business expenses benefit||This provides cover for fixed business expenses while you are disabled, enabling your business to keep afloat|
These are just some of the benefits you may be able to receive under different policies. Each policy will have details of exactly what's covered in the PDS.
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