Saving up for a new flatscreen TV, a dream overseas holiday, a wedding, a car or a house? You’ve got dreams, you’ve got plans…but, what happens if you become sick or injured and you’re not able to work? All of a sudden, you’re using your hard-earned savings to pay the mortgage, buy groceries and keep your power switched on.
Think about your lifestyle, family, income and expenses. If you are no longer able to work due to illness or injury, will you have enough money to cover day-to-day living expenses until you are able to work again?
No one wants to spend their savings on keeping themselves fiscally buoyant in the event of a financial shipwreck; Income Protection insurance provides a financial life-jacket in unpredictable fiscal seas.
What is Income Protection Insurance?
Income Protection insurance is a form of Life Insurance that protects you against a temporary loss of income if you suffer a prolonged illness or injury. Like most insurance, Income Protection comes in a variety and shapes and sizes, so it’s important to shop around and ‘try before you buy’ to make sure you get the right fit for your lifestyle. As standard, Income Protection insurance will pay you up to 75% of your regular income until you are able to work again; the maximum length of time you are covered for will vary by insurer.
How much does it cost?
Premium costs will vary depending on age, gender, occupation and lifestyle choices (like smoking). It’s important to check each policy’s details as cover inclusions and exclusions vary widely depending on the insurer. Factors that are taken into consideration when you apply for Income Protection are the following:
- Pre-existing medical conditions
- High risk occupation
- High risk hobbies and recreational activities
- High risk travel pursuits
Many superannuation funds offer basic Income Protection insurance as a superannuation benefit at a lower rate than many retail insurers, however, be careful. Some superannuation Income Protection is often offered at a very basic level and may only cover your income for a short period of time. There may also be more exclusions, so check the Product Disclosure Statement carefully to make sure you are comprehensively covered.
Bonus! Income Protection as a Tax Deduction
Just when you thought you were shelling out more of your hard earned dollars on insurance, we’ve got a nice little bonus for you. Some Income Protection policy premiums are tax deductible! The Australian Taxation Office states that you can claim the cost of premiums you pay for insurance against the loss of your income. Bear in mind that any payment you receive from an Income Protection insurance policy as a result of a claim must also be claimed as income when you file your taxes.
For more detailed information on the tax implications of your insurance, please contact a qualified accountant.
The Final Word
Nobody plans on getting sick or sustaining an injury, however life’s full of unpredictable weather and it’s best to be prepared. With Income Protection insurance as your life-jacket, you’ll be able to focus on recovering and getting back to work without worrying about financial strain.
Compare your Income Protection insurance options and protect your financial future against a financial shipwreck today. For more detailed information on Income Protection insurance, your can learn more from comparethemarket.com.au here. If you are looking for life insurance you can find it here.