Written by 
- The Savvy Promise
At Savvy, our mission is to empower you to make informed financial choices. While we maintain stringent editorial standards, this article may include mentions of products offered by our partners. Here’s how we generate income.
What happens to your income policy when you pass on?
Income protection policies are designed to help Australians protect their income by paying back 75% of their income in the event that they fall ill or sustain an injury that makes you temporarily disable. In the event where you pass on an income protection policy will not cover you. Although most policies do not explicitly state this fact, the policy will be terminated, due to the fact that the main beneficiary has passed on.
What are other exclusions I should be aware of?
Life insurance policies have terms that will differ from lender to lender and will also be determined on an individual basis. This is why it is vital that you read the product disclosure statement which outlines what your income protection policy offers and the exclusions that come with it. Some of the general exclusions that can prevent you from having your claim paid out are:
- An intentional self-inflicted act
- War, terrorism, unrest or insurgent activities in countries outside of Australia
- Travelling to a country which the DFAT has declared as a ‘Do not travel’ area
- Illness or injury sustained while committing a criminal offence
- During pregnancy, giving birth, miscarrying
- Termination of pregnancy (but you will still be covered if you sustain partial or total disability 3 months after the termination.
What other policy can I take out to protect my loved ones?
Thankfully, there is a wide range of life insurance policies that can be bundled up to protect you and your loved ones from financial instability. You can take out an income protection policy and bundle it up with life insurance or a funeral policy that will ensure that your loved ones are taken care of when you pass on. However, keep in mind that not all policies are the same. Speaking to an insurer or broker can help you compare options that are suitable for your circumstances.
How do I know I am getting the best policy?
Not all income protection policies are created equal, but doing your homework can help you find one that will adequately cover you. It is possible to get policies that cover 85% of your salary, but most policies will cover you for 75% of your income. Check your policies premiums to see if you will be getting the best value for your money.
Also, ensure that your policy will be able to cover you in terms of the occupation that you have. There are policies that are specifically designed to protect people who work in occupations where injury and illnesses are more likely to occur such as construction and nursing. Remember to always compare.
Did you find this page helpful?
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.
