Why do we need income protection insurance?
1. It ensures your income continues even if you can’t work
None of us likes to live on the thought that we could suffer a serious illness or injury. But every week thousands of Australians find their lives unexpectedly turned upside down because of a health issue or injury.
If you have income protection insurance you could continue to receive up to 70 per cent of your regular income, though you cannot work.
That means you can focus on getting better rather than worrying about how you’re going to cover bills such as the mortgage, medical cost, school fees, other outgoings.
2. Income protection insurance can be customised
An income protection policy can be tailored as per your requirement and can be adjusted to your individual circumstances.
You can choose to pay a higher premium, so your policy starts paying out two weeks after you make a successful claim or opt to reduce your premiums by extending this period. Under some policies, you can stretch this period to two years.
Likewise, you can select a policy that will pay a benefit for one, two or five years. Or one that could provide a monthly benefit until age 65, provided you are still unable to work.
You can opt for a stepped policy, where your premiums start out cheaper when you’re younger and rise as you age. With this option, premiums are recalculated based on your age on the anniversary of your policy each year. Or a level policy, where the premiums will be based on your age at the time you took out the cover.
3. Your income protection premium may be tax-deductible
Premiums for insurance on things such as your house are generally not tax-deductible.
Even other forms of personal insurance, such as life cover, TPD (total and permanent disability) and trauma insurance that can prevent people from becoming a burden on the welfare system are generally not tax-deductible.
But premiums for an income protection insurance policy paid directly by you (that is, one not taken out through superannuation) may be tax-deductible, depending on the types of benefits covered.
4. Making a claim is straightforward
Insurers aim to make the claim process as smooth as possible.
If you’re out of work due to illness or injury, contact us or your insurer to inform them of the situation. Then it’s typically just a matter of sorting out the paperwork (a claim form, a doctor’s report and privacy statement) and providing some supporting information about your income.
5. It helps your life get back to normal quicker
Being out of work for even a short period can have serious long-term negative consequences for most people. The family home may need to be sold, retirement plans delayed, children sent to different schools, high-interest loans taken out to cover urgent bills, or bankruptcy declared.
It can also take years for things to get back to normal again. By taking out income protection insurance, you’re not only helping ensure you and your family will be OK while you’re out of action, you’re also maximising the chance of everything quickly going back to the way it used to be once you’ve recovered.
6. Rehabilitation benefits
If you are left unable to work due to injury or illness there is also a chance that you may have increased medical costs ahead of you. Through your income protection policy, you may receive, or be reimbursed for some of the costs associated with rehabilitation programs or equipment. The rehabilitation benefit may help you get back on your feet sooner.
7. Partial disability benefit
Some insurers offer a partial disability benefit as an optional extra, which covers you if you return to work but at a reduced capacity (e.g. part-time). If you have been off work due to sickness or injury during your waiting period, and you then return to partial work duties, you could receive a reduced monthly benefit until your benefit period ends or you return to work completely (whichever happens first).
8. Easy To Claim
No one can predict the upcoming challenges. Sometimes, insurance claims are too tricky and time-consuming when you need them the most. However, this protection insurance is pretty easy to claim- Complete your paperwork, such as signing a privacy policy, submitting a doctor’s report, and filing the form. That’s it. You’re ready to get your money.
9. It Reduces Your Stress
It’s pretty hard to find peace when you’re suffering from a financial crisis. In such cases, here comes the income protection policy that provides you up to 70% of the income each month. So, now, you no need to worry about finances even if you lost your job.
10. It Takes Care Of Financial Imbalances
Do you want to cover all your financial imbalances while searching for a job? If yes, that’s what income protection insurance offers you. It covers all your minor to significant finances until you get a new job.