the what & how of iP insurance cover!
19th February 2019
What is income protection (IP) insurance?
Income protection is a monthly payment paid to you if you are unable to work due to illness or injury
What are the benefits of having IP?
Your income continues if you are unable to work. Your premiums may be tax-deductible if the policy is paid directly by you and not through your superannuation fund
How much can I be covered for?
Income protection can cover up to 75% of your monthly income. There are different options to consider depending if you are self-employed or a salary/wage earner
Can it be paid from my super account?
Income protection policies can be within your super account depending on your policy and super fund
How long can I claim it for?
Your policy will have a benefit period and that’s how long your payments will last. You can choose this, and the periods can range from 2 years up until age 65
How long do I have to wait until I start receiving my payments?
Policies have a waiting period, which is the time you must wait from when you are unable to work to the time you become eligible for payments. Waiting periods range from 14 days up to 720 days
How much will the policy cost?
The cost will vary based on the following factors:
whether you smoke or have previously smoked
the percentage of income you’d like to cover
the waiting period before the policy pays out
the range of illnesses and injuries covered
health (your current health, your weight, your family medical history)
Still unsure how it works? Read this quick case study.
Leanne works full-time and earns a salary of $90,000 pa. She owns a home worth $500,000 and has a mortgage of $350,000. If she’s unable to work due to illness or injury, she wants to be able to meet her living expenses and mortgage repayments without having to eat into her limited savings. After assessing her goals and financial situation, her financial adviser recommends she take out income protection insurance to cover 75% of her monthly income. Shortly after taking out the insurance, Leanne is involved in a serious car accident and is unable to work for six months. Because Leanne had income protection insurance, she receives the full benefit of $5,625 per month for five months after her initial one month waiting period (where she’s covered by sick leave from her employer). As a result, Leanne receives a total income of $35,625 during the six months she’s off work – consisting of a combination of sick leave and income protection benefits. If Leanne had not taken out income protection insurance, she would only have received a sick leave payment of $7,500 and would have struggled to meet her living expenses, mortgage repayments and out-of-pocket medical costs.
Chat to either James, Caitlin or Tom to find out how you can get covered today.