It depends on how much money you’d need to maintain your lifestyle if you couldn’t work. It’s important to ensure that the payout you’d receive is enough to cover your regular household expenses. To get an idea of the right level of cover for you, look at your current regular income and compare it to your household expenses. If you couldn’t manage your expenses with 70% of your regular income, it might also be worth considering a life, trauma or total and permanent disability insurance policy that could pay a lump sum amount if something happened to you.
If you’re self-employed, it can be hard to determine your regular income, so you may want to consider consulting with a financial adviser.
Yes, there are some occupations that are considered too risky for insurance companies to provide any income protection. This can be either because they are hazardous jobs and have a higher risk of injury, or the role typically experiences fluctuating income that is hard to predict.
Some examples of jobs that are risky for insurance companies to provide income protection for may include roles such as:
Note: This list of occupations is intended as a guide. The specific list of occupation exclusions will vary between insurers, so always refer to the PDS for the full details.
It’s possible to have an income protection policy bundled in your super fund. However, if you’re self-employed, you need to organise your own super contributions. If you already have a super fund from a previous role where you weren’t self-employed, you might be able to continue making contributions to that account.
When it comes to income protection through superannuation for self-employed people, it’s important to note that the premiums are taken from your super contributions. If you don’t make super contributions, the super fund will charge your insurance fees from your super balance, which can leave you with less money for your retirement.
There are some further pros and cons to consider. While premiums may be relatively affordable for income protection through super, the cover and features you have access to might be limited. If your super is through a super fund, claims may take longer to process since the fund trustee needs to be part of the claim approval process. You also won’t be able to claim a tax deduction for your income protection premiums if your policy is through your super fund and your premiums are deducted from your contributions.
The cost of your income protection insurance premiums will be based on a number of factors, including:
These are only a few examples of possible factors involved in calculating your premiums. For a full list of how your insurer calculates your premiums, refer to the policy’s PDS.