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Risk Insurance

Income Protection Insurance

Income protection (also known as sickness and accident insurance) will replace 75% of your income for either a specific period of time or until you reach the age of 65 years, depending on the policy of your choice. So, if you become seriously ill or have an accident that prevents you from working for an extended period of time, your income protection insurance will help you live and meet some, if not all, of your financial commitments.  Importantly, it will also help you avoid using your savings and investments for daily living expenses.

Another component of income protection insurance is that it is available as part of an income protection policy is business expenses insurance. This is designed for the self-employed or business owner. Business expenses protection can provide up to 100% of allowance business expenses incurred if you were to become unable to operate the business.  Refer to the business insurance section for more information on important insurance cover for business owners and partners.

Choosing an income protection policy suited to your needs

Many people have income protection insurance within their superannuation policy. This is often a cost effective means of obtaining income protection cover, however, the cover generally provides for only 2 years of income protection. The smart solution is to take out a separate policy that has a 2 year waiting period and a longer pay out period, such as to age 65 years. The 2 year waiting period will reduce the costs of the premiums for this longer acting policy, which can either be paid annually or monthly.

Income protection policies differ from provider to provider. You will need to ensure the cover that you get is the right one for you. Also, you will need to be sure that the policy covers everything you think it will for the money you are paying, for example;

  • does the policy suit your occupation?
  • if you are on a salary package, does the policy cover 75% of the whole salary package or just the cash component?
  • will you be paid if you are unable to work or only if you are unable to work in your specific occupation?
  • will it reduce payments in line with other income you may have including workers compensation?

As an advisor qualified in the area of risk insurance, we will be able to assist you to choose the most appropriate policy for you.

Please contact us to discuss your income protection insurance needs.