6 features you should look for when looking to get an income protection plan

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on November 25th, 2021       

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When it comes to buying an income protection policy you shouldn’t just settle for the first one that comes your way. Since it will be used to cover you in those difficult times you are unable to work due to an illness, injury, or disability you will have to get something that understands you and your financial needs. Here are six features to look for in an income protection policy to see if it is the right fit for you.

Redundancy cover

According to the Sydney Morning Herald, it takes 70% of Australian workers to find a job within a year, with 1 in 3 being paid less than their previous jobs. Not all income protection policies come with a cover that will cover you if you become redundant. You will have to supplement your income protection with another policy that will help cover you if you have been made redundant.

Premium waiver

Getting an income protection policy that understands those tough financial moments that come when you are unable to work is important. This feature is helpful when your finances have taken a dip and you are unable to meet the payments on your premiums. If you receive a total or partial disability benefit, then you won’t have to pay any premiums on your income protection insurance.

Cover for rehabilitation purposes

If you are recovering from an injury or an illness the last thing that you would like to accompany your physical pain is the mental pain of the accumulating bills you will have to pay off. Check to see if your income protection plan has you covered for rehabilitation expenses.

The benefit period

This is basically the length of time that you select where you wish the policy to substitute your salary for a set period. There are two periods you can choose between, which is a policy that extends between 2 or five years. You can also determine the age that you would like the policy to last up until. Most policies last up until you turn 65.

If it keeps up with inflation

You don’t want to live on an income protection plan that stays the same when the Retail Prices Index is forever changing. Find a cover that has an index lined premium to ensure that the sum you have insured for holds its value until your policy expires.

Non-cancellable policy

Make sure that you are covered on the legal side of things so that you are not short changed when you need your income protection the most from your insurer. A non-cancellable policy will prevent insurers from cancelling, or lifting the cost of your premiums. If you comply with the terms of the contract this will prevent insurers from going as far as reducing your benefits.

However, to get a deal that matches your need and your money you will have to shop and compare. Always ask your insurer questions regarding the policy and never sign a contract without fully understanding it.

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