Need a quick summary? Watch our educational videos to help you find the right insurance solution
Learn the Basics of Income Protection Insurance
What do you consider to be your most valuable financial asset? Is it your house? Your car? …or is it your ability to earn an income? Statistics have shown that one in three Australians have a chance of becoming disabled for a period of up to three months before turning 65. Could you survive for three months or more with no income and still pay for all of your living expenses, medical costs and outstanding debts? This is where Income Protection can help, by providing a monthly benefit of up to 75% of your regular income if you are unable to work due to serious illness or injury.
What are some of the other benefits of income protection?
While WorkCover protects you in the event of an accident that occurs at work, Income Protection covers you even if you are ill or your injury occurred outside of work. You are also able to design your income protection cover according to your own needs, with additional benefits and policy features to ensure the right level of protection is in place. These benefits can help cover the costs of rehabilitation and any professional nursing care that may be required while you are recovering. Additional benefits will often be paid in addition to the monthly benefit of 75% of your income.Some policies will also offer a Death Benefit, paying a multiple of your monthly insured income in lump sum to your dependents in the event of your death.
How are income protection premiums determined?
The premium you pay will be based on the perceived level of risk you carry. This is determined by a range of factors including:
- Your age
- Any pre-existing medical conditions
- Whether you smoke, and
- The nature of your occupation
Your premiums will also be determined by the policy you choose and how it is structured. Important factors to consider include:
- The waiting period before the benefit is paid, which can range from 14 days to 2 years,
- A benefit period is the period during which you will receive benefit payments. This can range from two, five years or until the age of 65,
- and whether your benefit payment is structured as Agreed or Indemnity ValueWith an Indemnity policy, the benefit is determined by your gross income in the year before a claim was made. An Agreed value policy will pay the benefit amount that was applied for when the policy was taken out. Agreed Value can be more attractive for self-employed workers with fluctuating incomes.
You can choose to pay your premiums either fortnightly, monthly or annually, although these option may vary between providers and unlike other life insurance policies, Income Protection premiums are generally tax-deductible.
How does life insurance work?
Life Insurance provides a lump sum payment in the event of your death or if diagnosed with a terminal illness, with 12 months to live. This payment is given to your financial dependents, such as spouse, children, and ageing parents maintain their current way of life if you were to pass away.
There are different types of Life Insurance
- Life Cover pays out a lump sum payment in the event of death or terminal illness.
- TPD Insurance that pays a lump sum payment if the insured becomes permanently disabled and is unable to work again.
- Trauma or Critical Illness Insurance provides payment if the insured suffers a medical trauma or injury. This could include Cancer, Stroke, and Heart attack.
Policy conditions will vary between insurers, so make sure you compare before you buy.
How do you compare different policies to find the right one for your situation?
Think about the amount of coverage you will need, which will depend on:
- Your daily living expenses
- Your outstanding mortgage
- Outstanding personal debts
- The number of children you have to provide for
- Education expenses
To determine how much life cover you need based on your current situation, you can receive a rough estimate with Life Insurance Finder calculator.
There are also factors that determine how much premium you pay, such as;
- Whether you smoke
- Drinking habits
- Family medical history
- Pre-existing medical conditions
At time of assessment, these factors enable an insurance provider to determine the level of risk you carry which is reflected in the premiums you will pay
Begin the Application Process
Looking to apply? Make an enquiry in the form below to receive quotes for a range of life insurance and income protection products in Australia.
An Insurance Consultant will contact you to discuss the quotes you have received and help you find the right policy.
Compare Life insurance quotes from these direct brands
Interview Video: Dale Maroney (from Walter Carter Funerals) on Preparing for a Funeral in Australia
In this interview, Dale Maroney, from Walter Carter Funeral, shares with us the process of arranging a funeral in Australia and why the costs often vary from one to the other, as well as the importance of being prepared, emotionally and financially, should the time comes.