Benefits of having income protection, a recent survey showed that 73 percent of Australians have no income protection policies and have no intentions to get one in the foreseeable future.
The survey that was undertaken in August 2021 showed that only 16 percent have income protection and another 11 percent don’t have it but are planning to get it at a later date.
Here are a list of benefits outlining why getting income protection is a wise thing to do.
It Ensures That Your Income Continues Even When You Are Unable To Work
If you happen to unexpectedly suffer a serious injury and already have income protection insurance you might be eligible to receive up to 70 percent of your regular income, even if you are not working.
Every week a large number of Australians experience a life changing event or serious health problem. When you have income protection you can focus on getting your health fixed and therefore not have to worry about how you are going to pay the bills for your everyday necessities such as food and electricity.
Income Protection Insurance Can Be Customised
One of the benefits of having income protection is it can be customised. Whenever income protection policy is purchased from an insurer, it can be adjusted dependent on the persons living situation. This is not the case for income protection that is provided by the majority of super funds.
Each individual can decide to pay a higher premium so that way your policy starting paying out two weeks after you make a successful claim, or opt to reduce your premiums by extending this period. Under some policies, you can stretch this period to two years.
Furthermore, you can also select a policy that will pay a benefit for, one, two or five years. You can also select a benefit that will pay you each month until you reach the age of 65, if you are still unable to return to work.
You are also able to select a stepped policy, which is when your premiums start out cheaper when you are younger and gradually increase as you get older. By selecting this option, your premiums are recalculated based on your age on the anniversary of your policy each year. Or a level policy, where the premiums will be based on your age at the time you took out the cover.
All in all, you have plenty of freedom to tailor your policy to suit the amount of cover you want at a price you can afford.
You Might Be Able to Use Income Protection Insurance to Look After Your Sick Child
One of the additional features that you can include in your customized income protection policy is called Family Care Cover.
Parents of a child who suffers a serious accident or illness may need to take time off to care for their child full-time.
However, because the parent remains in good health and is capable of earning an income, they usually are unable make a claim against any of their insurance policies.
If financial assistance is available from the government, it’s unlikely to be enough to cover even the standard expenses, let alone the additional cost of medical bills.
In most cases a parent will choose to take time out from their job or business to support their child and worry about financial repercussions later on.
If you have Family Care Cover you will have less financial worry because you could be paid a monthly benefit.
This benefit is paid for a period when the parent of the sick child stops working in their regular occupation to care for a dependent child too ill or injured to attend school or childcare. Waiting periods and maximum cover periods usually apply make sure you check the policy terms for details.
Your Income Protection Premium Could Be Tax-Deductible
Premiums for insurance on items such as your house are in most cases not tax deductible.
Even other forms of personal insurance, such as life cover, TPD (total and permanent disability) and trauma insurance that can prevent people becoming a burden on the welfare system are generally not tax deductible.
But premiums for an income protection insurance policy paid directly by you (that is, one not taken out via superannuation) could potentially be tax-deductible, depending on the types of benefits that are covered.
You Might Be Covered for Redundancy
If you assume that you might struggle keeping up with your mortgage, personal loan, car or credit-card repayments for a few months after being made involuntarily redundant then it’s worth considering covering yourself against this.
Depending on the type of policy you have, it pays a monthly benefit while you remain unemployed but may last for a set period, for example, three months.
Making a Claim Is An Easy Process
Insurers try their best to make sure the application process is as straightforward as possible.
If you are out of work due to illness or injury, contact your insurer to inform them of the situation. Then it’s typically just a matter of sorting out the paperwork (a claim form, a doctor’s report and privacy statement) and providing some supporting information about your income.
It Will Help You Get Your Life Back To Normal Faster
The last and certainly not the least benefits of having income protection is for a lot of people, not being able to go to work for even a short period of time can have a serious long-term negative impact on your daily life.
The family home might need to be sold, retirement plans delayed, children might need to be sent to a cheaper school, high-interest loans taken out to cover urgent bills, or bankruptcy declared.
It might take you several years for you to get back to normal again. By deciding to take out income protection insurance, you are not only helping make sure that you and your family will be okay while you are unable to work. By taking out income protection insurance you are increasing the chance of everything going back to normal once you have recovered from your illness or injury.