Top 5 features to look for in income protection insurance

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.
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, updated on November 25th, 2021       

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We never know where life will take us; just like we can have happy events, we can also have unfortunate ones, like a death of a loved one, an illness to battle or the loss of a job. Luckily, there are some steps you can take to protect yourself from some of these occurrences, or, at least, soften the fall, so to speak.

Today, we are talking about income protection insurance and what are the 5 top features that you should look for when shopping for this type of insurance.

Lifestyle choices

Not surprisingly, your lifestyle has a lot to do with how much you are going to end up paying. In other words, the riskier your life choices, the higher your premiums. A smoker or heavy drinker, for example, will have higher premiums than a person who is abstinent, because they run less of a risk of internal organ damage, serious illness or death.

Occupation & recreation

Again, logically, your specific occupation will also influence your premiums. If you work as a miner, you can bet your premiums will be sky-high, and with good reason. Your life is in danger, and you are constantly under risk of work-related injuries that can render you unable to work.

Someone in a corporate environment, who works in a cubicle, however, is less likely to gravely injure themselves and claim the insurance money, so their premiums will be significantly lower.

Age, gender

As with any type of insurance, the younger you are, the lower your premiums are. That is directly related to the state of your health and your increased risk of illness that comes with age. So, as a young person with no vices or a taste for extreme sports, you shouldn’t be charged an arm and a leg. Along the same lines of biological realities we cannot alter, women will have higher premiums than men because they are statistically more likely to retire early. This can be because they are taking care of children, elderly parents or sick relatives.

Period of benefit

How long do you plan on counting on the insurance money, after you claim it? The longer this period is, the higher the premium will be. Of course, this depends on each particular person and their situation, but it must be thought about carefully. A longer period of benefit will be more expensive, but it is an expense that will prove to be well worth it, in the eventuality of illness or injury.

Deferred period

Similarly, how long after you are unable to work do you plan on claiming the insurance money? Waiting for a longer time works for your benefit because you will pay less. The earliest available claim is four weeks after you stop receiving income, but that’s going to cost you. It may be worth it to set up a savings account separately, so that you can rely on it to live for a while, before resorting to claiming the insurance.