Income Protection Insurance is designed to provide you and your family with financial security and protection in the event that you are suddenly unable to work because of an illness or injury. It pays out a replacement monthly income of up to 75% of your regular income, so that you still have a reliable income stream to help you cover your bills, mortgage and daily household expenses while you are recovering.
You should consider taking out Income Protection Insurance if you:
- Rely primarily on your income for daily household costs
- Have bills, a credit card, rent or a mortgage to pay
- Want to be able to maintain a comfortable lifestyle if you were suddenly not earning an income for an extended period of time
- Want added financial security for you and your loved ones
With comprehensive Income Protection Insurance, you and your family won’t have to struggle to pay your necessary household expenses while you are going through an already stressful and difficult time.
It can provide the financial support and protection you need whilst you focus on recovering and getting back to work.
To apply for an Income Protection Insurance policy, you simply need to be:
- An Australian citizen or permanent resident, living in Australia
- Aged between 18 and 60 years old (63 for white collar occupations)
- Working at least 20 hours per week in your main occupation, for at least 12 months prior to taking out the policy. If you are self-employed, you need to have been working in that position for at least 24 months before taking out your policy.
Professional Income Protection Insurance and Life Insurance Advice
At Special Risk Managers, we are dedicated to finding high quality Life Insurance and Income Protection Insurance products on the best terms for those who have pre-existing medical conditions or health issues, and are having difficulties securing adequate cover on their own.
We provide professional life insurance advice and work closely with our network of leading insurers and reinsurance companies to help you obtain the amount and level of income protection you need, no matter what your personal circumstances are.
We have successfully secured Life Insurance and Income Protection Insurance products for hundreds of Australians that live with pre-existing medical conditions and health issues, and are committed to making quality cover a reality for everyone. Have a look at the extensive list of medical conditions we can help obtain cover for, and if you’d like to talk to one of our expert insurance specialists about securing Income Protection Insurance for your medical condition, please get in touch with us today.
Important Definitions in your Policy
Just like with any other type of Life Insurance policy, the features and definitions of your Income Protection Insurance policy will vary between insurance providers. It’s critical that you make sure you understand exactly what your policy is offering you by reading the Product Disclosure Statement carefully and speaking with a professional insurance advisor before taking out any cover, to ensure it is providing you with the level of protection you need.
Our dedicated insurance specialists will always consult closely with you to make sure they are providing you with insurance options that align with your circumstances, needs and budget. Your insurance is a long-term investment and it’s important that you are getting exactly what you need out of it.
In most cases, Income Protection Insurance policies are very flexible and allow you to tailor your plan to suit you and your needs. Below are the important definitions and terminology within your policy that you need to be aware of:
This is the time you will have to be off of work before being entitled to claim on your income protection policy. All income protection policies have a waiting period, and you can usually choose between anything from 14 days up to 2 years.
A shorter waiting period means a higher premium, so make sure you consider your current circumstances and think about how long you could afford to support yourself and your family on your own savings before you would need to start receiving benefits if you weren’t able to work.
The longer you can wait to receive your benefits, the cheaper your premiums will be.
This is the maximum period of time you can receive your income protection payments for. Benefit periods range from as little as 12 months to as long as ‘to age 70’.
‘To age 70’ generally means that your benefits will cease on the policy anniversary prior to your 70th birthday. With most insurance providers, the benefit period will be restricted or extended based on how hazardous your normal occupation is.
If you can shorten your benefit period, you will pay lower premiums.
An Agreed Value policy guarantees that the monthly benefit payment specified in your contract will be the amount you receive if you make an Income Protection Insurance claim.
This gives you the added assurance in knowing that even if your income drops at the time of making the claim, you would still receive the full benefit amount.
An Indemnity policy means that your monthly benefit payment will be evaluated when you make a claim.
While this type of policy is generally much cheaper than an Agreed Value policy, you should only consider it if you are in stable employment with little chance of your income being reduced.
Included and Optional Extras
Most Income Protection Insurance policies come with a number of included benefits at no additional cost, and optional benefits for an added cost. This gives you the freedom and flexibility to customise a plan that gives you all the protection you need.
While these included and optional benefits will differ between insurance providers, common included extras may be benefits such as:
- A recurring disability benefit
- A death benefit
- A transplant and cosmetic surgery benefit
And optional extras might include benefits such as:
- Day 1 accident cover
- Cover for nursing care
- Cover for business expenses
Income Protection Insurance: Frequently Asked Questions
Choosing the right policy requires careful thought, consideration and advice. Before you take out any Income Protection Insurance policy, make sure you speak to one of the qualified specialists at Special Risk Managers to ensure you are obtaining the most affordable and comprehensive cover for your medical condition or health issue.
You should also consider the following:
How much Income Protection Insurance do I need?
The right amount of income protection depends on a number of different factors. You need to take into account your situation and needs, your current salary, and how much money you would need to meet your daily expenses and pay your bills if you were suddenly without an income. You also need to be aware that the amount of cover available to you will be dependent on your salary and will generally only provide cover up to 75% of your current income.
Please talk to one of our specialists for professional life insurance advice based on your personal circumstances.
This is the time you will have to be off of work before being entitled to claim on your income protection policy. All income protection policies have a waiting period, and you can usually choose between anything from 14 days up to 2 years. A shorter waiting period means a higher premium, so make sure you consider your current circumstances and think about how long you could afford to support yourself and your family on your own savings before you would need to start receiving benefits if you weren’t able to work.
The longer you can wait to receive your benefits, the cheaper your premiums will be.
What factors can affect the cost of my policy and premiums?
Factors and lifestyle choices that can affect the amount you pay for your Income Protection Insurance policy and premiums include:
- Your age, gender and smoking status at the time of taking out cover
- Your occupation
- Your involvement in hazardous or high-risk recreational activities
- Your general health and family medical history
Do I need to disclose the details of my pre-existing medical condition or health issue?
Yes, you must fully and correctly disclose all relevant information to your insurance provider when applying for cover. While having a pre-existing medical condition or health issue such as high blood pressure will typically mean slightly higher premiums, it is very important that you are upfront and honest in your application.
If it comes to making a claim and your insurance provider finds that you did not disclose an important piece of information, your claim will be refused and you will lose all the premiums you have already paid towards your cover, leaving you in a much worse situation.
Will my premiums increase?
The cost of Income Protection Insurance will increase as you get older, and also if you increase the amount of cover at any time during the life of your policy.
Your premium is calculated and reassessed every year, and is based on your age at the time, your benefit level and the type of plan you have chosen.
Do I need Income Protection Insurance if I already have Life Insurance?
Income Protection Insurance and Life Insurance protect you in two different ways. While it’s not necessary to have both, you need to consider your personal needs and circumstances to assess whether you require each type of cover.
Both insurance products can work together to provide reliable financial security for you and your family in different situations. Income Protection Insurance will replace your income when you’re not able to work for an extended period of time, while Life Insurance pays a lump sum benefit to your nominated beneficiaries when you die.
Both are designed to protect you financially at a time when you and your family will need it most.