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1. It covers up to 75% of your income
Income is your most valuable asset as a working person. It provides peace of mind if you are unable to work due to illness, injury, temporary or permanent disability. It helps you to focus on getting better without the headache of how you are going to pay bills and sustain your loved ones. An income protection policy covers up to 75% of your income. Some insurers allow an additional 15% cover which is normally linked to your superannuation.
2. You can find a policy that caters to your specific needs
We all differ in terms of how much we need to cover our monthly expenses, so why should you be blanketed under a one-size-fits-all policy? You know have the ability to find a policy that will match your situation and your budget without causing you to scramble for money to patch up your finances in order to keep your family above the bread line.
There are various benefits that come with different policies that you can tailor make to suit your needs at the right price. The catch is that if the cost outweighs the benefits then you should probably move on to another cover that is affordable.
3. Are you covered by it if you are made redundant?
Unfortunately, if you are made redundant, your income protection plan will not cover you, but there is no need to despair as there are alternatives. You can purchase a Premium Waiver for Involuntary Unemployment feature as an add-on to your policy. Speak to your insurer to ask if this feature is provided along with your policy.
4. Make your salary keep up with the inflation rate
To have full peace of mind you will have to look at the features that come with the policy you are taking out. Check to see if your income protection policy keeps up with the inflation rate, for the period you have set it for, both before and after any potential claim.
5. Know what type of policies you can choose from
Keeping up with its flexibility of tailor making a policy, you will have to consider what type of policy you want before you sign up. Before you make your choice, you will have to consider how each type will impact you when it’s time to make a claim. There are mainly three which are agreed value, indemnity value, and guaranteed agreed value.
6. Bundle up
If you want to link your income protection to other policies such as life cover, Total and permanent disability insurance (TPD), and trauma. This will make it easier in terms of managing your payments for multiple policies under one.
7. There are waiting and benefit periods
When looking at the features of your income protection cover you will find that there are various features that come with it. It’s important that you check these features to see if they will cater towards your situation.
There is a waiting period in which you will have to wait for a defined period after you made a claim to start getting compensation after you have sustained an accident or injury before you receive a benefit.
Your benefit period is basically the length of time that your policy will pay out your income. The time frame will be decided upon by you which can be between 2 or 5-year
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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.
The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.
Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.
Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.
For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.
