Income Protection Insurance

If you were unable to work for an extended period of time, would your family be able to cope with everyday living expenses such as groceries, rent, mortgage payments or education costs?

Income protection insurance replaces some of the income lost through your inability to work due to injury or sickness. It is an important consideration for anyone who relies on an income. It is especially suitable for self-employed people, small business owners or professionals whose business relies heavily on their ability to work.

Each income protection policy has its own definition of disability and range of benefits. Income protection usually offers cover for up to 75% of your gross wages for a maximum time period (eg two years or to age 60).  Income protection policies may be stepped or level, so you must make sure you understand what sort of policy you are getting.

• Stepped premiums will increase each year as you get older but is cheaper in the beginning. 
  
  
• Level premiums don’t change as you get older but are more expensive in the beginning.

You will also need to choose a waiting period when you select your level of cover.  This is the period of time (often 30 to 90 days) before you can make a claim. When deciding on a waiting period take into account your leave balances - annual, sick and long service leave.  Also take into account access you may have to emergency cash to minimise your premiums.

You may already have income protection insurance through your superannuation policy. Income protection premiums in your name are generally tax deductible.