Income Protection to keep you going
Income Protection cover provides a monthly income to replace lost earnings due to injury and/or illness. We believe everyone should have Income Protection (IP) if they are working.
Compare Income Protection insurance companies with ease
At Find Insurance, we have made it easy for you to compare and acquire income protection insurance with some of the largest and most established companies in Australia.
Income protection insurance provides you with a steady monthly income. The amount payable is based on 70% of your current earnings at time of claim for the first 2 years and then it will reduce down to between 40-60% of earnings depending on which insurer you choose. Some insurers, if the benefit period chosen is 5 years or less, will allow 70% of earnings to be paid for those first 5 years.IP is cash flow in your hands when you need it most. It is the only insurance cover that provides a monthly regular income stream to help cover your daily living expenses, mortgage repayments and other discretionary expenses you cannot do without.You’ll receive a monthly income benefit until such a time you have recovered from your illness or injury until you have either gone back to work or for the nominated amount of time you chose to receive the payments or until the policy expires, whichever is the earliest.A lot of insurers will now cover you up to age 65. That means if you get injured at age 52 and can never work again, the insurer will pay you IP until age 65 if that is what you have chosen.Insurance companies offer different levels of Income protection that vary in cost. You can either choose the basic IP or an IP that comes with all the bells and whistles.
Who needs Income Protection insurance?
If you’re the main breadwinner in the family you should have Income Protection. We believe anyone working should consider having Income Protection and treat it as though it is part of their renumeration package.
Everyone wants to work hard and build up wealth. So it makes sense to ensure that you, your family and ultimately your wealth is protected.
Income Protection is the only insurance whereby the premiums are tax deductible. In essence, if you are working then the ATO is paying for some of your premiums.
Agreed vs Indemnity
Income Protection insurance cover allows you to choose Agreed or Indemnity type policies. If you can demonstrate earnings at time of application then go Agreed is a preferable option.
When choosing an Income Protection (IP) policy you will have to choices as to the type of policy you would like to have: Agreed or Indemnity.As of 1st October, 2021, all insurance companies can only offer Indemnity type IP policies. As such, care needs to be taken to understand the difference between Agreed and Indemnity type policies.With Agreed policies, you have to demonstrate proof of earnings at time of application. If you make a claim and are on agreed, then the insurer will pay you that amount for which they have agreed when you first submitted your application.With Indemnity policies, you have to proof what you earn at time of application and at time of claim. If your income is less at time of claim compared to when you first submitted your application then the insurer will pay you less.Also, if you have an indemnity IP policy you should be mindful of the fine print, especially IP policies provided by industry funds. The fine print for most indemnity policies allows the insurer to not pay at claim time if you are not working at the time you become injured or ill. For instance, if you are in between jobs and decide to take a holiday. Whilst on holiday you become injured, the insurer might decline the claim and not pay you the Income Protection you were hoping for. Also, you need to be aware of offset clauses. This is more relevant for those who own and run their own businesses. If the business continues and you still earn a profit, this profit could offset what you might be entitled too.If you currently own an Agreed IP policy, then you need to carefully think twice before cancelling it in the future as you will never get an Agreed policy ever again.
How much IP insurance coverage do you need?
You can only apply for a maximum of 70% of your earnings. As such, financial planners will generally provide a quote for 70% of the income you are currently earn.
If your Income is going to grow over time then choose Indexation/CPI to allow for the benefit you have insured for to grow each year with the aim to keep up with your wage growth.If you would like to work out how much IP Insurance cover you might require then book an appointment with an advisor.
