Income protection insurance right for you? Here are 5 questions to consider

Not sure if income protection insurance is right for you? Here are some practical questions to help you understand how it works and whether it may suit your needs.

If you stopped receiving your pay cheque tomorrow, what would you do?

For some Australians, sickness or injury can unexpectedly affect their ability to work for an extended period of time. When that happens, regular expenses such as mortgage repayments, rent, bills, groceries and other household costs do not necessarily stop.

But that's where income protection insurance may help.

Income protection insurance is designed to provide regular payments if you are unable to work due to sickness or injury, helping you ease financial pressure while you focus on recovery.

With this in mind, we are looking at five key questions to ask when deciding whether income protection insurance could be right for your circumstances.

We will also walk through how Zurich EziCover Income Protection Insurance works, so you have the information you need to consider your next step.

Quick answer: What is income protection insurance?

Income protection insurance is designed to help replace part of your income if you are unable to work due to sickness or injury.

It generally does not cover redundancy, retrenchment, dismissal, or voluntary unemployment. Instead, it is intended to provide financial support if sickness or injury affects your ability to earn an income.

With Zurich EziCover Income Protection Insurance, eligible customers may receive up to 70% of their pre-disability income, up to a maximum monthly benefit of $12,000, subject to policy terms and conditions.

Get cover with Zurich

1. What type of employment situations can benefit from income protection insurance?

Income protection insurance may be worth considering if your income plays an important role in helping you meet your regular financial commitments.

This may include people who:

• rely on their income to cover everyday expenses
• have a mortgage, rent or other ongoing commitments
• have a partner, children or family members who depend on their income
• are self-employed or run their own business
• have limited savings or sick leave available as a financial buffer
• want to reduce financial pressure if sickness or injury affects their ability to work.

Many people think about income protection insurance as a way to help protect their financial position if they are unable to work for a period of time. It may help cover regular expenses and reduce disruption while they focus on recovery.

For people who are self-employed or operate their own business, this type of insurance can help offer peace of mind. It can help provide financial support at a time when there may be fewer employer-provided safety nets and may still need to manage business or household costs if they are unable to work.

Keeping these considerations in mind can help you make a more informed decision about whether income protection insurance may suit your needs.

2. What sort of cover does income protection insurance provide?

Income protection insurance is designed to replace a portion of your income if you're unable to work due to sickness or injury. The amount of cover you may be eligible for can vary depending on:

• How much you earn
• The insurer and policy you choose
• The level of cover you select
• The waiting period and benefit period you choose
• The premium you're prepared to pay

Choosing the right balance between cover and cost can help ensure the policy is more closely aligned to your financial needs and budget.

With Zurich Income Protection Insurance policy, eligible customers may receive up to 70% of their pre-disability income, up to a maximum monthly benefit of $12,000. The amount you receive will depend on your income before you became unable to work, the level of cover selected, and the terms and conditions of the policy.

3. What can income protection insurance payments help cover?

Income protection payments are designed to help ease financial pressure if sickness or injury affects your ability to work.

Once paid, the benefit can generally be used in a way that best supports your circumstances. This may include helping with:

• mortgage or rent payments
• bills and utilities
• groceries and everyday living costs
• loan repayments
• education or childcare expenses
• household commitments
• recovery-related expenses or practical changes at home, depending on your needs.

The key is to think about both your immediate expenses and your longer-term financial wellbeing.

If your income stopped for a period of time, what costs would continue? Understanding this can help you decide how much cover you may need.

4. How long can income protection payments last?

The length of time you can receive income protection payments depends on the benefit period you choose when you take out your policy.

A benefit period is the maximum period your monthly benefit may be paid for an eligible claim, provided you continue to meet the policy requirements.

With Zurich EziCover Income Protection Insurance, you can choose from three benefit periods:

• 1 year
• 2 years
• 5 years.

The option you select will affect your premium, so it is worth considering how long you may need financial support if sickness or injury prevents you from working.

When choosing a benefit period, ask yourself:

• How long would my savings last?
• What expenses would continue if I could not work?
• Does anyone else rely on my income?
• Would I want shorter-term cover or longer-term protection?
• What premium can I comfortably afford?

There is no single right answer. The best option will depend on your financial commitments, budget and personal circumstances.

5. If my superannuation already has income protection insurance, should I still get a separate cover?

Many superannuation funds include some level of insurance cover. This may include income protection insurance, although the amount and type of cover can vary widely.

Before deciding whether you need additional cover, it is worth checking:

• how much income protection cover you currently have through superannuation
• how long benefits may be payable
• what waiting period applies
• whether the cover amount would meet your regular expenses
• whether the cover still suits your current income, debts and family situation
• whether any exclusions or eligibility conditions apply.

You can then compare your existing cover against your regular living expenses and financial commitments.

This may help you identify any gaps, such as a lower monthly benefit, a longer waiting period or a shorter benefit period than you would need.

Reviewing your existing arrangements can help you understand whether your current cover is enough or whether separate income protection insurance may be worth considering.

Conclusion

If sickness or injury affected your ability to work, would your current financial safety net be enough?

Understanding your existing cover, financial commitments and options can help you make a more informed decision about whether income protection insurance is right for you.

To find out more about income protection insurance with Zurich, just visit their website.

Learn more about Income Protection Insurance with Zurich

Disclaimer – Zurich EziCover Income Protection Insurance

Ezicover Income Protection is issued by Zurich. Ezicover is a registered trademark of Zurich.

This information does not take into account your personal objectives, financial situation or needs. You should consider these factors and the appropriateness of the information to you. Consider seeking advice specific to your individual circumstances from an appropriate professional. You should also consider the relevant Product Disclosure Statement (PDS) for the product available at www.zurich.com.au/life-insurance/documents or by calling 1800 022 114 in deciding whether to acquire or to continue to hold the product. A Target Market Determination for the products are available here or by contacting Zurich on 1800 022 114.