If you’re like me and have been working non-stop since the day you completed your studies, you might have an impressive 16+ years of income earning under your belt. While I can’t recall each year’s income I’d venture a guess that my total income over these 16+ years to be about $960,000 gross.
I have made many investments throughout the years in the hope of generating a substantial passive income. However, to date, my passive income from investments has yielded only about $25,000 of the above sum.
Are you taking the appropriate steps to protect this asset? Do you have appropriate insurance coverage, such as income protection, in place to provide you and your family with financial security should you suffer a sickness or accident and not be able to work and earn an income.
However, this is not always the case. For example, if you have a 2 or 5 year benefit period and your policy has paid out your maximum benefit, it will stop. It’s best to thoroughly read and understand the relevant insurer’s PDS before you commit to a decisions.
The waiting period is generally selected by you at application time and will impact your premiums and ability to claim.
It depends. If you feel your ability to work and generate an income is worth insuring, then yes.
Such a protection policy can allow you to provide for yourself and your family. Continue to pay your mortgage, credit cards and bills, while keeping your investment strategies in place.
The policies we compare at Life Insurance Direct do not usually cover redundancy, however, select insurers do offer some options when it comes to unemployment. Click here for more information.
People generally have a misconception regarding what exactly workers comp covers and its payment period. The primary limitation is that it will only pay if the injury happens at work, usually not covering you for sicknesses or accidents that occur at home. The maximum pay-outs also vary from state to state.
Centrelink, the sickness allowance benefit provides eligible Australian residents a $527 per fortnight benefit should you have a sickness or accident and satisfy all their requirements, including:
The benefits provided by centrelink are extremely low and most working Australians would find it very difficult to meet all the eligibility criteria.
Shop around and compare cover and prices – they differ greatly. Your premiums will be dependent on a number of things, including your current salary and benefit period you want to be covered for. Other determining factors include your:
On the bright side, premiums for protection insurance are generally tax deductible.
There are generally three main options:
For more ways to tailor your policy, read our detailed policy option guide.
You must correctly and accurately answer all the questions the insurer requires of you, to at the time of your application, including full details of your:
You must also tell your insurer of circumstances that might have changed between the time you applied and when the cover starts, for example becoming pregnant. Also, tell your insurer if you partake in dangerous hobbies or have a lifestyle that includes heavy drinking and/or taking drugs.
If you already have a pre-existing medical condition, look for an insurer that will be prepared to cover it, although you might have to pay more or have an exclusion attached to it.
Provide the insurer with the most complete information you can. This allows them to accurately understand your particular circumstances.
You can buy a protection policy from a life insurance broker or directly from the insurance company. Remember, when taking out any insurance policy, you should carefully read the terms and conditions.
Look for helpful built in benefits that might be included in your policy. It’s also important that you regularly review your total insurance coverage package as your circumstances change. Ask an experienced insurance advisor about the insurance products they have which best meet your current needs.
As a working professional, your most important assets is you. The ever-present possibility of sickness or injury is without a doubt your biggest risk. Protect yourself and your family’s needs, while you’re unable to work and earn a salary. Contact an insurance specialist and start comparing quotes today.
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Questions & Responses
Which is the best income protection for me?
Hi Jane, thanks for contacting us. There are many options available with Income Protection and likewise choice of Insurers with this type of policy. Please contact us on 1300 135 205 and one of our specialists can answer your questions and discuss these options with you.
I am 35 and work in an office - can you please give me an example of a reason someone like me would need income protection? Are there any stats on the subject?
Thanks for your great question Peta. There are many reasons someone would consider Income Protection and as you say you work in an office so therefore you might say you have a much reduced risk of an accident in your occupation compared to a 'physical occupation that is outdoors' for example. But importantly, it is wise to remember that a 'sickness' can affect anyone and there could be many illnesses that could prevent people working for extended periods of time. For example in 2013, OnePath Life's Income Protection Claims for Females were 18% due to Cancer and also 18% for Heart Conditions which is quite significant. Likewise, Income Protection will generally cover someone 24 hours a day / 7 days per week so you are covered on weekends or while travelling for example and accidents could occur in those situations.
Hi,
I have a pre-existing illness but am still working in a corporate environment, please advise on an Insurer that will provide Income Protection in this situation. Willing to wait 90 days and would prefer up to age 65. Thanks
Hi Catharina and thanks for making contact. As we work with 11 x Life Insurers in the Australian Market it is just a matter of one of our Income Protection Specialists assessing your pre-existing condition with these Insurers that we work with. They will look at the severity of your condition, current treatment and long term prognosis as to whether a policy would be accepted at standard rates, with a loading (higher premium) or an exclusion. There is no cost to you for one of our Specialists to conduct a pre-assessment and provide some outcomes and options for you. Feel free to contact us on 1300 135 205 and we can help you in this regard.
Hi
I only need Personal Injury Insurance to cover myself as working as a Counsellor/Psychologist/Social Worker with the Department of Veteran Affairs. I am Contracted for providing this service as a Sole Trader through my business.
Thanks for contacting us Mariana. One option we can provide you with information on is 'Accident Only' Income Protection. As the name suggests it will only cover you for Accidents and not sickness or illness and therefore the premiums are generally lower than full Income Protection policies. If this policy would meet your requirements you are welcome to contact one of our Income Protection Specialists on 1300 135 205 who can explain the policy in more detail and provide you with a no obligation quotation.
I want accident only income protection cover to top up my current Income protection policy, providing more cover should I have an accident.
Which accident only Income protection policy won’t reduce how much I receive because I have another income protection insurance policy, even though it is of a lower amount.
Hi Andrew.
Personal accident insurance policies are generally more cost-effective because they only cover accidents, and usually, do not require to be medically underwritten.
However, income protection policies have built-in offset clauses, meaning you can generally only insure up to 75% of your income, this counts for accident only income protection policies too. The reason for this is to prevent people from taking out multiple policies and trying to claim 100%. As you can imagine, such a person would not be motivated to return to work.
Although, you can have two income protection policies with complimentary waiting and benefit periods. For example, your accident only IP policy could have a 30 day waiting period and a two year benefit period, while your other income protection policy has a two-year waiting period, but pays a monthly benefit up to your age 65.