Have you ever thought about what might happen to you or your dependents if you were suddenly unable to work? How would you afford monthly bills, mortgage payments, and other miscellaneous expenses that support your livelihood?

If this feels like a stressor for you, it might be time to start considering income protection insurance, especially if you work within a high-risk occupation.

It’s important to find out how it works, when you need it, and the factors you need to consider when buying it.

What Income Protection Insurance Covers 

In essence, income protection insurance is designed to replace a portion of your income if you’re unable to work due to an unexpected illness or injury. Income protection insurance then provides monthly payments (for a specified period of time), typically up to 70% of your pre-taxable income to help you meet expenses while you recover.

However, it’s important to be mindful that each income protection insurance policy is subject to your provider’s specified terms and conditions. Moreover, keep in mind that the higher the cover, the more you’ll end up paying in monthly premiums. This makes it critical that you calculate exactly how much coverage you’ll need in the foreseeable future in the event of the worst happening.

For instance, if your monthly income is $15,000 but you only require less than half of that to live comfortably for a period of time, then the amount you’ll pay in premiums will be much lower. This allows you to better manage your present monthly expense while accounting for the additional but necessary cost of income protection insurance.

Key aspects of income protection insurance typically include: 

• Monthly benefit payments, designed to replace a specified amount of your lost income. 
• Benefit period, which varies depending on the policy you undertake. Typically, the maximum length you receive payments for can be anywhere from one year up till a specific age, like 65. 
• Waiting period, which represents the minimum amount of time you need to wait after being unable to work to start receiving benefit payments. 
• Partial disability benefits (only offered by some insurers) for those who are still able to work part-time but at a reduced capacity. 
• Return to work support (only offered by some insurers) such as rehabilitation or vocational training. 
• Offsetting clauses that may reduce the benefit you receive if you receive income from other sources (workers’ compensation, other income protection policies, etc) during the specified benefit period. 
• Superannuation contributions, in which some policies may include a component that replaces the superannuation contributions you would have made if you were able to work full-time. 
• Choice of benefit period, wherein you can decide how long you would like to receive benefit payments for.

Each income protection policy has its own definition of partial or total disability that must be met before a claim can be made. We understand that the options available to you are wide and varied.

If you find this overwhelming, don’t hesitate to contact us for more information. As experienced brokers, we’ll guide you in partnering with the right provider to suit your exact needs.

Do You Need Income Protection Insurance? 

This very much depends on your individual circumstances and current financial situation. 

Here are several questions you can ask yourself when deciding whether income protection insurance is right for you.

• Do I have savings or other financial safety nets to cover my expenses?
• What are my monthly living costs (e.g. rent/mortgage, utilities, groceries, debts)?
• Do I have dependents who rely on my income?
• Is this a short-term safety net, or do I need long-term coverage?
• Is my job considered high-risk or physically demanding?
• Does my employer provide any income protection or disability cover?

If you are still unsure, seek advice from a qualified professional who can help you determine the right level of coverage and policy options for your needs. 

Get Insured Today– Before Life Happens

A critical but often overlooked component of any financial plan, income protection insurance is a smart investment, especially while you’re still young. With lower monthly premiums, you’ll be able to safeguard your financial future if the worst were to happen. 

The team at Morgan Insurance Brokers can help you secure the best income protection policy for your needs, providing valuable peace of mind, even during the most challenging circumstances. We’ll help you compare different policies from various providers to find the best option for your needs and budget. 

If you need assistance obtaining income protection insurance or have questions about the details, contact us to speak with one of our experienced brokers.