Income Protection Insurance: Protecting your most important Asset

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When we think about insurance, our minds immediately turn to our homes or our cars. But have you considered the need to insure your biggest asset – your ability to earn income. Although we don’t like to think about it, life can change in an instant. So, if your family relies on your income to meet financial obligations and living expenses, reviewing your personal income protection requirements should be at the top of your list.

What is Income Protection?

Income protection is an insurance policy that provides you with an ongoing income should you become sick or injured and are unable to work. It will enable you to meet mortgage and other loan repayments, and pay living expenses such as child care, groceries and utility bills. This insurance is an important aspect when considering your entire financial position and planning for the future.

Am I Eligible For Income Protection Insurance?

Whether you are a salaried employee or self-employed, you can apply for income protection cover. Although employees are covered to a certain extent by Work Cover in Australia, there is no substitute for adequate cover that insures you for incidents in and outside of the workplace. Without access to Work Cover, this insurance product is vitally important for the self-employed.

There are So Many Policies – How Do I Decide?

There are different income protection policies on the market with their own waiting periods, premiums and income coverage. It’s important to check any eligibility criteria and exclusions as some policies restrict cover for certain events and for particular occupations. The overall aim is to ensure you can continue meeting your commitments and maintaining your lifestyle during a period of not working.

Premiums

Premiums are usually paid monthly and can be stepped or level. Stepped premiums rise with time whereas level premiums will stay at the same rate while you continue to hold the policy.

Waiting Periods

The waiting period before benefits are paid can have an effect on the quoted premium. You should speak with your financial planner to find the option that is right for you. Waiting periods are usually between 30 and 90 days, however there are also options for longer waiting times. It’s important to consider your full financial picture when deciding on your waiting period as you may have existing insurance or resources that can be utilised before your income protection insurance kicks in.

Benefits

You can choose a benefit period from 2 years up to 65 years of age. Most policies provide protection for up to 75{89774503f1dc5a8067a215bf11c503ad6eecdd9fbdfb7beae4875fba6258e357} of your income. Consider a policy’s maximum monthly benefit in your decision making as some insurer’s benefit amounts may be insufficient for your requirements.

Taxation Concessions For Purchasing Income Protection

Structured correctly and with a holistic view of your finances in mind, purchasing income protection may provide you with a number of taxation benefits depending on the option you choose.

Income Protection Insurance outside Super

Premiums paid for income protection outside of your super fund are generally tax deductible. You also may have a greater range of policies to choose from.

Income Protection Insurance in Super

This is a helpful option if your cashflow outside of Super isn’t enough to cover the insurance premiums. However, your superannuation balance will decrease with the payment of premiums. Some Australian super funds now also offer income protection as a standard default insurance along with life insurance. These default policies should be reviewed to ensure they meet your needs.

Take a Holistic View of your Personal Insurances

Income protection is often considered as part of a complete review of your personal insurance needs. This includes life insurance, total and permanent disability insurance, and trauma cover. Invest in peace of mind. There are a number of ways you can obtain income protection insurance. By speaking with a Financial Planner first, it means that the choice of policy can be aligned to your current and future financial needs.We know insurance can get confusing. So, here’s a snapshot of information about income protection to give you a simple overview. View our Insurance Protection fact sheet.

Income protection insurance provides peace of mind for you and your family and allows you to focus on recovery if you become sick or injured. Speak to one of our Planners on 1300 27 28 29 who can help find the right policy for you. Or click below to make an appointment online.

Book an appointment!Email:info@rjswm.com.auThis blog has been prepared by RJS Wealth Management Pty. Ltd. ABN 24 156 207 126. RJS Wealth Management Pty. Ltd. is a Corporate Authorised Representative (No. 438158) of Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licensee (Number 233209). The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.

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