Your ability to earn an Income is perhaps one of your greatest assets, as nearly everything now comes down to you continuing to earn an income to pay for everything; the mortgage or car repayments, school fees, even just general household bills and groceries.  So how would you feel if it  was lost or taken away?

Most people wouldn’t drive without car insurance, or live in a house without home and contents insurance, however most Australians don’t even consider protecting their income.

Income Protection Insurance provides a replacement income to help you and your family meet the cost of living in case of injury or illness.  How long could you afford to cover your expenses without draining your savings?

The Facts

●   2.6 million Australians aged under 65 are living with a physical disability

●   Australians have a one in three chance of being diagnosed with cancer before the age  of 75

●   690,000 Australians were injured at work between 2005 to 2006, with 43% not receiving any financial assistance

●   More than 60% of Australians will be disabled for more than one month during their working life

●   More than 25% of Australians will be disabled for more than three months during their working life

 Despite the risks, and the facts, many Australians do not have Income Protection Cover, often due to a some common misconceptions.

”I’m covered under Workers Compensation”…  Workers compensation is limited and only applies if you are injured during working hours or for illness resulting from your employment.  It no longer even covers you during transport to and from your work place. It certainly will not cover you if you are injured at home, on holidays or become sick from a non-work related illness.  If you are self employed, you may not even have this cover.

“I can’t afford it” … Income protection premiums are 100% tax deductable for everyone and can cost less than a couple dollars per day.  Alternatively you can have your Income Protection placed inside your superannuation fund, and thus utilize your super savings to help fund the premium. Your work Super contributions can also then be used to help offset the premium.

The Basics

Income Protection provides a replacement income (benefit amount) for a specified period of time (benefit period) when you are unable to work  due to sickness, injury or accident.

You are covered for 24 hours per day, seven days a week, world wide.  It does not matter whether you were at work or not, or on holidays or just spending time at home.

Income protection can be tailored to suit a variety of different needs, depending on your time of life, expenses and income. Some options include;

Benefit Amount

• You can typically cover for up to 75% of your income, and now also add in an additional 10% for superannuation contributions, taking total cover up to 85% of your income.
•  The greater the income covered, the more expensive your premium will become.

Waiting period

• You get to chose how long you will wait before you receive benefit payments;  14, 30, 60 or 90 days (the longer you wait the cheaper the premium becomes).
• Most people tend to have mortgage repayments due in a months time, and we have found 30 days a typical waiting period selected

Benefit period

• You chose the benefit payment period ie how long the payments would continue if you were on claim; one, two or five years, or until the  age of 65 or 70
• In most cases we would suggest to opt for the greatest benefit time possible, or at least until age 65 if it is available for your chosen occupation

‘Agreed value’ or ‘Indemnity’ Cover

• ‘Agreed Value’ cover will pay the predetermined sum insured, no matter what your income is at the time of claim, even if  it has reduced.
• ‘Indemnity’ cover will pay whatever is the lessor amount between your sum insured and your income at the time of claim.
• The agreed value policy is perhaps the more thorough policy, but not always required, depending on your given circumstances, so it is always worth discussing with us first to help assist in this determination.

Inside or outside Superannuation

• You may be able to hold your Income Protection Cover inside your superannuation fund, and pay premiums using pre tax dollars.
• Rules and restrictions apply, so please consult with us in determining the best course of structuring the cover

Choice of premium options

• ‘Stepped’ premiums increase each year in line with your age, while ‘Level’ premiums remain constant until you’re 65 or 70 depending on which ‘level’ premium option you have selected, after which they convert to stepped.
• Whilst stepped premiums are typically cheaper to begin with, the level premiums can offer greater long term value.
• We will assist in determining the appropriate  premium  option, as it will often vary with each individuals circumstances.

Our value Proposition

• As you can see from the above, it can be as simple or as complex as you like, with many different Insurers throwing in their own individual terms and conditions, offering multiple policy types and numerous bells and whistles, just to complicate things a little further ie the fine print.
• One of our jobs it to try and make it as simple as possible for you, and sort through a lot of the superfluous information.
• As independent financial advisers, we have the ability to pick and chose the best Insurance Providers to meet your individual needs.  Different Insurers specialise in different Occupations, Ratings and included benefits and you can rely on us to let you know who we feel is providing the best ‘value for money’.
• This first requires getting to know your circumstances, something that we pride ourselves in taking our time to get right.

Income Protection is perhaps one of the most difficult policies to put in place, but once set up, it is like Gold.

Get it right the first time.