Under most income protection policies, if you return to work before the end of the designated benefit period and begin earning a partial income, you are likely eligible for what is termed as ‘partial disability benefits’. These benefits are designed to supplement the income you earn, should you find yourself capable of working in a limited capacity but not yet able to return to your full duties or previous earning capacity.

Partial disability benefits effectively bridge the gap between your partial earnings and the level of income protection initially determined by your policy, supporting a more flexible and gradual transition back to work. This arrangement acknowledges that recovery can be a progressive journey, allowing you to gain financial support while encouraging a return to professional activity as your health permits. It’s important to review your specific policy details or consult with your insurance provider to understand the precise terms and conditions that apply to earning additional income during the benefit period.

Income protection insurance offers essential financial support when illness or injury prevents you from working, but it’s important to know the limitations and exclusions that typically accompany these policies. Being aware of these exclusions helps in setting realistic expectations about the scope of the insurance cover. Here are some common exclusions that you’re likely to encounter in income protection insurance policies:

Pre-existing Medical Conditions: Coverage does not typically extend to health issues that were known or diagnosed before the policy initiation. This includes any related symptoms or treatments that existed prior to the commencement of the policy.

Injuries Caused by Self-Harm: Any injuries that are the result of intentional self-harm, including suicide attempts, are usually not covered under income protection policies.

War & Terrorism: Any disability or injury resulting from wars, acts of terrorism, or similar conflicts is generally not included in the coverage.

Illegal Activities: Injuries or disabilities that arise while engaging in unlawful acts or as a result of criminal behavior are not covered.

High-Risk Behaviors: Participation in activities that are considered dangerous or high-risk, such as certain extreme sports or professional sporting events, may lead to exclusions from coverage.

The waiting periods available for choosing are 30 days, 60 days, or 90 days. This is the period you must wait after becoming disabled before your insurance benefits can start.

Income protection insurance benefits are generally paid on a monthly basis, but in arrears. For example, if your policy has a 30-day waiting period, you would receive your first payment 60 days after the onset of disability.

The timing is structured such that there is always a month delay from the end of the waiting period to the disbursement of your first payment.

Yes, premiums paid for income protection insurance are generally tax-deductible. This is because the insurance is considered a way to protect your income-earning capacity, and thus the premiums are viewed as an expense incurred in earning taxable income.

The cost of Income Protection Insurance can vary widely based on several factors such as

• Age
• Occupation
• Health status
• Cover

Consulting with an expert, like Morgan Insurance Advisors, can help you navigate these variables and find the most cost-effective solution tailored to your specific circumstances.

The maximum benefit of income protection is usually 70-75% of your pre-tax income. You can also choose longer benefit periods, and shorter wait periods to maximum your income protection insurance payouts.

Determining whether you have income protection insurance within your superannuation fund depends on the specific provider and the type of superannuation fund you’re in. Many superannuation funds include default insurance coverage as part of their offering.

Morgan Insurance Advisors can help you navigate this process. Our team can review your superannuation details to determine if you have income protection insurance and advise you on the best options available.

The choice between life insurance and income protection insurance depends on your personal circumstances, financial goals, and the needs of your dependents.

Consider Life Insurance If:

• You have dependents who rely on your income.
• You have significant debts (e.g., mortgage) and want to ensure they are covered.
• You want to provide a financial safety net for your family in the event of your death.

Consider Income Protection Insurance If:

• You rely on your income to cover living expenses.
• You want to ensure financial stability if you are unable to work due to illness or injury.
• You have financial obligations that need to be met regularly, even if you are unable to work.

Income protection insurance is designed to provide you with a regular monthly income if you are unable to work due to illness or injury. This type of insurance typically covers up to 75% of your pre-tax income, ensuring that you can maintain your living expenses during your recovery period. The benefits are paid out for a specified period, which can range from a few months up to age 65, depending on your policy terms. Income protection is ideal for situations where you experience a temporary or prolonged inability to work but are expected to recover and return to employment.

On the other hand, TPD insurance provides a one-time lump sum payment if you are diagnosed with a total and permanent disability that prevents you from ever returning to work. This lump sum is intended to offer long-term financial security and can be used to cover significant expenses such as medical bills, home modifications, and ongoing care needs.

While you can receive Centrelink benefits while on income protection, the payments you receive from your insurance policy will affect the amount and eligibility for certain Centrelink benefits. It’s important to report all income accurately as Centrelink applies an income test to determine eligibility for payments such as JobSeeker Payment, Disability Support Pension, and other allowances. If your income protection payments exceed certain thresholds, your Centrelink payments may be reduced or you may become ineligible for certain benefits.

When income protection insurance premiums are paid through your superannuation fund, the premiums are considered to be paid by the fund, not by you directly. The superannuation fund can claim a tax deduction for these premiums, which effectively reduces the tax liability of the fund. Since you are not paying the premiums out of your personal, after-tax income, you cannot claim a personal tax deduction for them.

If your income protection insurance is paid through your superannuation fund, the premiums are not directly tax deductible for you personally. Instead, the superannuation fund can claim a tax deduction for the premiums paid.

The portion of the income protection insurance premium that is tax deductible in Australia is typically the part of the premium that covers the loss of income.

Income protection insurance premiums are exempt from GST (Goods and Services Tax). This means that you do not have to pay GST on the premiums for your income protection insurance.

In Australia, if your employer chooses to shut down their business, relocate operations to a different location, or close the current business in order to start a new venture, you may find yourself without employment. Such scenarios where job loss results from the employer’s decision to cease business operations or undertake significant restructuring are not uncommon. It is important to understand that in these circumstances, income protection insurance typically does not provide coverage. Income protection policies in Australia are designed to offer financial support when you are unable to work due to illness or injury, not due to economic changes or business decisions made by your employer. Therefore, if you are terminated because the business you work for is ending or moving, income protection insurance will not compensate you for lost income during your period of unemployment.