Did you know at least one in five Australians between the ages of 21 and 64 will be unable to work due to injury or illness at some stage during their lifetime?1
If you've been thinking about income protection insurance and whether it could benefit you and your family, we answer some of the commonly asked questions.
So what is income protection insurance?
Income protection insurance (or temporary incapacity or salary continuance insurance) provides cover if you can’t work due to illness or injury. It generally pays up to 75% of your monthly income for your chosen benefit period to help you pay the bills and maintain your family’s quality of life.
Income protection insurance can:
- cover daily living expenses, such as the mortgage, groceries and school fees
- pay your medical expenses and rehabilitation costs
- provide access to support services to help you return to work or find a new job, depending on your insurer.
Generally, you can purchase income protection insurance via an insurance company, broker, adviser or through your super fund. If you choose to purchase your income protection insurance through your super the premium comes out of your super.
Alternatively, if you pay directly, you’ll have to pay with after-tax dollars, but you may be able to claim your insurance premiums on your tax return2.
For more information check out our article Insurance inside super – what you should know.
Firstly, you’ll need to provide your insurer with all the necessary documents for your claim to be considered, such as your personal details, financial situation and medical information.
Most insurers have a waiting period (usually 30 to 90 days3), before they will start paying your claim. You may be able to select the waiting period when you take out the policy. Additional waiting periods may apply when insurance is purchased through your super, so it’s best to check with your insurer.
Is income protection insurance right for me?
Income protection insurance has helped many Australians to get through a difficult time without the added stress of worrying about how to pay the bills and look after their family4.
Everyone’s situation is different, so you need to think about what’s right for you.
If you are employed by an organisation, you may already have income protection insurance included in your super, so do check with your super fund. Also, make sure the amount you are covered for would provide enough to cover your everyday expenses, as well as any medical or rehabilitation costs.
If you’re self-employed, you may not have income protection insurance, so you may decide to buy it separately. Remember to check what it covers, how much it costs and how long you’ll be paid for.
Benefit periods and premiums can vary depending on your individual circumstances and the insurer.
Now might be a good time to review your income protection situation.
If you need further assistance, speak to your financial adviser. If you don’t have one, call us on 131 267 or use our find an adviser tool.
Check out these five hallmarks of a money-smart life.