Have you ever wondered how you and your family will cope if you had an injury or illness and couldn’t work for several months, or even years?

Insurance that provides an income when you can’t work

We put together this video a couple of years ago, but it is still really relevant today. It’s the story of clients of Milestone who took out Income Protection Insurance based on Rob’s advice. Unfortunately they had to make a claim on the policy some years later.

So what is income protection insurance?

Income protection insurance (or temporary incapacity or salary continuance insurance) provides cover if you can’t work due to illness or injury. It generally pays up to 75% of your monthly income for your chosen benefit period. This can help you pay the bills and maintain your family’s quality of life.

Income protection insurance can:
• cover daily living expenses, such as the mortgage, groceries, school fees
• pay your medical expenses and rehabilitation costs
• provide access to support services to help you return to work or find a new job, depending on your insurer

Generally, you can purchase income protection insurance via your super or through a financial adviser.

If you choose to purchase your income protection insurance through your super the premium comes out of your super.

Alternatively, if you pay directly, you may be able to claim your insurance premiums on your tax return(1).

How long do I have to wait to get paid?

You’ll need to provide to your insurer all the necessary documents for your claim to be considered. This includes your personal details, financial situation and medical information.

Most insurers have a waiting period (usually 30 to 90 days(2)), before they will start paying your claim. You may be able to select the waiting period when you take out the policy. When you purchase this insurance through super, additional waiting periods may apply. So it’s best to check with your insurer.

Is income protection insurance right for me?

Income protection insurance has helped many Australians to get through a difficult time without the added stress of worrying about how to pay the bills and look after their family(3).

Everyone’s situation is different, so you need to think about what’s right for you.

If you are employed by an organisation, you may already have income protection insurance included in your super (sometimes called salary continuance or temporary incapacity cover), so check with your super fund. Make sure the amount you are covered for would provide enough to cover your everyday expenses, as well as any medical or rehabilitation bills.

If you’re self-employed, you may not have income protection insurance, so you may decide to buy it separately. You should check what it covers, how much it costs and how long you’ll be paid for.

Benefit periods and premiums can vary depending on your individual circumstances and the insurer.

Next steps

So now might be a good time to review your income protection situation. If you still need help in deciding if income protection is right for you, speak to your Milestone Financial planner.

1 ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Other-deductions/Income-protection-insurance/
2 moneysmart.gov.au/insurance/life-insurance/income-protection
3 As life happens, we’re here for you. AMP claims paid 2014.

Source: AMP Advice