Your income protection policy will have a waiting period before payments start due to loss of income through injury or illness.<\/p>\n
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Income protection insurance doesn’t cover you for lost income because you are stood down or become unemployed.<\/p>\n<\/p><\/div>\n
Deciding if you need income protection insurance<\/h3>\n
Income protection insurance can be important if you:<\/p>\n
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are self-employed or a small business owner, as you may not have sick or annual leave<\/p>\n<\/li>\n
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have family members or dependents that rely on the income you earn<\/p>\n<\/li>\n
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have debt, such as a mortgage, you’ll need to make payments on even if you’re unable to work<\/p>\n<\/li>\n<\/ul>\n
To work out how much income protection you need,\u00a0prepare a budget<\/a>. This will help you see your monthly expenses and the income you’ll need to replace. You may want to factor in making payments to your super as well.<\/p>\n
Also consider:<\/p>\n
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if you have\u00a0total or permanent disability\u00a0<\/p>\n
\u00a0or\u00a0trauma insurance<\/a>, that can help replace lost income<\/p>\n<\/li>\n
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if you have\u00a0private health insurance<\/a>\u00a0that could help pay for any medical expenses<\/p>\n<\/li>\n
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what help or support from family or friends may be available<\/p>\n<\/li>\n<\/ul>\n
If you need help deciding if you need income protection insurance and how much, speak to us on |PHONE|.<\/p>\n
Choosing an income protection policy<\/h3>\n
Some of the things you’ll need to consider when choosing an income protection policy are:<\/p>\n
Policy type<\/h3>\n
Income protection policies are provided as either an:<\/p>\n
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Indemnity value policy\u00a0<\/strong>\u2014 the amount you’re insured for is a percentage of your salary when you make a claim. If your salary has decreased since you bought the policy, you’ll get a smaller monthly insurance payment. Indemnity value policies are generally cheaper and can be useful for people with a stable income.<\/p>\n<\/li>\n
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Agreed value policy\u00a0<\/strong>\u2014 the amount you’re insured for is a percentage of an agreed amount when you sign up for the policy. These are generally more expensive but can be useful if you have income that changes from year-to-year.<\/p>\n<\/li>\n<\/ul>\n
Waiting period<\/h3>\n
This is the amount of time you must wait before your payments start. Most income protection policies offer a waiting period between 14 days and two years.<\/p>\n
In general, the longer the waiting period, the cheaper the policy. When you’re choosing the waiting period, think about how much you have in sick and annual leave, savings and emergency funds.<\/p>\n
Benefit period<\/h3>\n
The benefit period is how long the monthly payments will last. Most income protection policies offer two or five years, or up to a specific age (such as 65). The longer the benefit period, the more expensive the policy. But it also means greater protection if you’re unable to work for a longer time.<\/p>\n
Stepped or level premiums<\/h3>\n
You can generally choose to pay for income protection insurance with either:<\/p>\n
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Stepped premiums\u00a0<\/strong>\u2014 recalculated at each policy renewal, usually increasing each year based on the higher chance of a claim as you age<\/p>\n<\/li>\n
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Level premiums\u00a0<\/strong>\u2014 charge a higher premium at the start of the policy, but changes to cost aren’t based on your age so increases happen more slowly over time<\/p>\n<\/li>\n<\/ul>\n
Your choice of stepped or level premiums has a large impact on how much your premiums will cost now and in the future.<\/p>\n
Use our Life insurance claims comparison tool<\/a><\/p>\n
Compare how long it takes different insurers to pay an income protection claim and the percentage of claims they pay out.<\/p>\n
How to buy income protection insurance<\/h3>\n
Check if you already have\u00a0income protection insurance through super<\/a>. Most super funds offer default income protection insurance that’s cheaper than buying it directly. You can increase your level of cover through your super fund if you need to.<\/p>\n
You can also buy income protection insurance from:<\/p>\n
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an insurance broker<\/p>\n<\/li>\n
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a financial adviser<\/p>\n<\/li>\n
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an insurance company<\/p>\n<\/li>\n<\/ul>\n
Premiums you pay for income protection insurance held outside of super are generally tax deductible. Policies outside of super usually allow a higher amount of cover and have more features and benefits available.<\/p>\n
What you need to tell your insurer<\/h3>\n
You need to tell your insurer anything that could affect their decision to provide you with insurance. You need to give them this information when you apply, renew or change your insurance.<\/p>\n
This can include your:<\/p>\n
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age<\/p>\n<\/li>\n
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job<\/p>\n<\/li>\n
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income (salary, wage, commissions)<\/p>\n<\/li>\n
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medical history<\/p>\n<\/li>\n
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lifestyle (for example, if you’re a smoker)<\/p>\n<\/li>\n
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hobbies or activities that are high risk (for example, skydiving)<\/p>\n<\/li>\n<\/ul>\n
The information you provide will help the insurer to decide:<\/p>\n
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if they should insure you<\/p>\n<\/li>\n
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how much your premiums will be<\/p>\n<\/li>\n
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terms and conditions for your policy<\/p>\n<\/li>\n<\/ul>\n
It is important that you answer the questions honestly. Providing misleading answers could lead an insurer to deny a claim you make.<\/p>\n
Making a claim on income protection insurance<\/h3>\n
If you want to make a claim, see\u00a0making a life insurance claim<\/a>\u00a0for information on what to do.\u00a0<\/p>\n
Please contact us on |PHONE| if you seek further assistance on this topic.<\/p>\n
Source : Moneysmart,Gov.Au September 2020\u00a0<\/a><\/span><\/p>\n
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