Income Protection is:
the most important policy to protect your future earnings;
almost always tax deductible;
often combined with Life Insurance to protect both your future earnings and take care of your family.
Income Protection Questions & Answers
How much income protection do I need?
You can get up to 75% of your income paid monthly up to the age of 70.
Most people like to insure for the maximum amount because that is 25% less than they are currently earning.
Which Insurance companies do we use? Are there ways to reduce the cost?
Where cost is an issue or cash flow is tight, we work with you to find solutions such as:
extending the waiting period, or
lowering the amount insured, or
moving part of the insurance into super
or even doing all three of the above at once.
The premium is heavily affected by your employment category, for example electricians pay more than accountants. It is very worthwhile discussing these details with us as we can regularly get our clients designated into a different category and therefore reduce the premium and improve the policy conditions.
What is the Benefit Period?
This is the time you choose to be covered for. You will be paid your monthly benefit from the end of the waiting period up until the nominated age or time.
Age 65 is recommended. Some insurers offer up to the age of 70. Many insurers offer between 2 and 6 years of cover for manual professions.
What is my wages go up or down?
Choosing Agreed Value means that your chosen benefit will be guaranteed at claim time regardless of what you are earning at that time.
Not choosing Agreed Value means that your benefit will be based on your income at the time of the claim.
Agreed Value is recommended if available because your cover will not be reduced if your earnings are lower (for example due to previous ill health) prior to claim time.
What other options should I consider?
For business owners and professionals with overheads it is highly recommended to also take out Business Expenses Insurance. Business Expenses Insurance is a low cost way of ensuring that your income protection payout is not wasted on covering the running costs of your business.
What does Waiting Period mean?
This is the amount of time you are prepared to wait before your benefit starts.
30 days waiting period is the most common.
14 days usually costs about 60% more.
90 days usually costs about 40% less.