In today’s unstable economic climate where only prices are steadily increasing, protecting your income has become very essential financially-wise – especially for those who have dependents or a family who depends on them.
In these hardened times; how else will you ensure that your regular monthly bills and expenses will be paid in the event you become ill or injured and unable to work? How else will you repay your mortgage, or even, most importantly, support your household, if you’re incapable of working for an extended period of time? Obviously, it is through having income insurance.
Having income protection, in these times of financial instability in the job market, is the most financially sound way of providing financial security to your family when you’re unable to work, providing you a replacement regular monthly income stream so you don’t face dire financial pressure at an already difficult time.
How does income protection work?
Income protection insurance provides you cover, 24 hours a day, anywhere in the world, regardless of impairment.
By just paying out an affordable monthly policy fee, in the event of a claim, you will receive a benefit amount – normally up to 75% of your gross salary in Australia – for a nominated period, or until you have recovered sufficiently to work again, or even up until the maximum benefit period as stated in the policy which is normally 2 year, 5 year or up to age 65.
What are the advantage and disadvantage of income protection insurance?
Just like any other thing, there are also advantages and disadvantages of income cover.
- Regular Weekly or Monthly Benefit. Usually, you will receive a pay out of as much as 75% of your gross salary in Australia, covering your lost earnings so you can continue settling all your bills, support your family and even your medical expenses.
- Short-term redundancy cover. Some plans allow for short-term redundancy cover.
Covers even for longer period of time. In most cases, the real financial risk when you’re unable to work is long-term, such as having to take off work for a year or two or 5 years. How will you ever support your family and pay those bills for such long periods? Having income protection, you can still continue to get your due benefits until you have recovered sufficiently to work again, or up until the maximum benefit period as stated in the policy which is normally 2 year, 5 year or up to age 65.
- Tax Free Benefits. Unlike other forms of insurance, payouts paid from the policy in Australia are fully tax deductible and free of National Insurance.
- Has to wait for a certain number of days or months. Income policies have waiting periods. You have to wait for a period of 30 to 90 days before you can actually get the first payout of your insurance.
- Waiting period can directly affect the amount of premium paid. A shorter waiting period means a higher premium.
Why you need to compare first before buying income protection?
With the countless income protection insurance policies available in Australia, it makes sense to compare income protection.
Because there are many options to consider when buying such insurance products, making it confusing to choose the right and the best among them, shopping around, comparing and deciphering the difference between premiums and their associated benefits and payment options as well as selecting the level of protection that you require, is the best way you can and will come up with the right and most suitable income cover that is tailored to your needs and budget.
To better make a well- informed decision, you all need to know all the details in the comparison quotes, the differences in the policies and the reasoning behind the price differentials so you are clear on what you are getting.