Income protection is ‘maintain your lifestyle’ insurance. Income protection cover provides a monthly payment to replace your income so you can cover your day-to-day living costs, bills and the mortgage, while you focus on your health.
If you’re like most people, your way of life is at least partially dependent on your ability to work. Therefore, an extended absence because of sickness or injury could be devastating to your lifestyle, and that of your family.
Income protection is designed to help in such circumstances – replacing your income if you are unable to work due to sickness or injury. The maximum cover is usually 75% of earnings. However, optional additional benefits may be available.
Ask yourself some questions:
If you rely on your income from paid work to survive, and do not have a large emergency savings fund, then you may benefit from income protection insurance.
The benefit paid by income protection can help you keep up with all the expenses your income usually takes care of. That includes things like mortgage repayments, groceries and your regular bills.
This money also means you don’t have to rely on family and friends, government assistance, or leave entitlements from your employer — none of which are guaranteed to provide a sufficient level of financial support.
It’s important to note that benefit payments for income protection usually don’t start immediately, as a waiting period can apply during which no benefit is payable (this could range from 14 days up to two years).
Exclusions may apply for certain events.
Insurance policies will often vary in their features and benefits, so you should work with a financial adviser to choose a policy that suits your needs and your budget.
Few people can afford any major financial setbacks in their life, which is why it is important to speak to a financial adviser now to ensure you and your family are protected.
Chris Black is an award-winning financial planner based in Toowoomba who specialises in personal insurances including life insurance, income protection, total permanent disability and trauma insurance. To discuss your insurance protection needs, please email us at firstname.lastname@example.org or book online.
Written by Emma Linton Doig, Practice Officer at Fortress Financial Solutions.
* The LIFEWISE/NATSEM Underinsurance Report, February 2010.
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