Income protection

Income protection premiums refer to the ongoing payments you make to maintain your income protection cover. You can choose between a stepped premium, which recalculates and increases as you age, or a level premium, which remains constant over time. Understanding these options can help you decide on the best coverage for your situation.

Income protection insurance pays a monthly benefit that covers up to 75% of your pre-tax income if you're unable to work due to illness or injury. These monthly payments help you keep up with your financial obligations, such as mortgage repayments and family expenses, while you recover.

Yes, many superannuation funds include income protection insurance. This coverage can help replace your income if you're unable to work due to illness or injury. However, the level of cover available through a super account may not always meet your financial needs or match the flexibility of a standalone policy. It's important to assess whether the coverage provided through your super fund is sufficient for your personal circumstances, and if not, consider additional protection options.

Income protection insurance protects you against a loss of income through injury or illness.  Income protection can pay you up to 75% of your normal annual income for 2 years, or right up until age 65.  It can be an invaluable way to protect you and your family against unforeseen circumstances that prevent you from returning to work.

Income protection insurance can be vital if you’re:

• A small business owner or self-employed
• Supporting a family
• Still paying off a mortgage
• Looking to maintain financial independence in the event of injury or illness
  

How much you should spend on income protection insurance all depends on your personal financial situation. Rather than think about it in terms of what it costs, it helps to instead think about what it would cost to be out of work.

Income protection insurance is designed to support you for an extended period of time. So, to determine how much you should spend on your income protection, it’s useful to start by working out your budget. Map out all your monthly expenses, and match this against the income you’d usually earn. It’s also a good idea to plan for super payments, too, so you can continue planning for your future.

So ultimately, what you spend on your income protection will be determined by the level of cover you require, and the value of the quote you receive. We can connect you with our network of over 15 trusted insurance providers, to ensure you get the best income protection insurance quote for your situation.

There are a number of things you need to take into account when choosing the best income protection insurance policy:

Waiting periods

Generally, income protection insurance policies will include a waiting period of anywhere between 14 days up to 2 years in some cases. You’ll usually find that the shorter the waiting period, the more expensive the policy, and vice versa. So, when choosing your policy, be sure to factor in whether you have sick leave, annual leave, and savings or emergency funds available.

Benefit periods

The benefit period in your income protection policy is the period of time during which your payments last. Most income protection policies offer periods of between 2 and 5 years or up to the age of 65. Typically, the longer your benefits last, the more expensive your policy will be—but it also means you’re covered for longer.

Premiums

You will usually find you can pay your income protection insurance in one of two ways. Under a stepped premium, your policy is recalculated every time it renews and will usually increase as you get older. A level premium charges a flat rate at the outset, which is usually higher than a stepped premium but isn’t likely to increase as much as your policy progresses.

Income protection payments are the monthly benefits you receive if you are unable to work due to illness or injury. These payments are designed to help you cover your ongoing expenses, such as mortgage repayments and everyday living costs, ensuring financial stability during difficult times.

Income protection insurance premiums are generally tax-deductible, which means that you can claim these costs on your tax return to reduce your taxable income. This helps make income protection more affordable and provides an additional financial benefit.

Income protection insurance benefits your employment income by providing a replacement income stream if you are unable to work due to illness or injury. This ensures that even if you're not earning your usual employment income, you can still maintain financial security and meet your obligations.