28 Jun Income Protection – and why you need it!
We never forget to have our cars, our homes and occasionally even our pets insured. But what we tend to forget entirely is how important it is to insure our ability to earn money.
But what is income protection? Income protection protects you for a set level of your income. This means that you will still receive money (usually 75% of your gross salary) when you come to an event where you had to stop working due to an accident or an illness. This insurance will still pay you a specific amount of money for an agreed length of time.
If you don’t have your income insured, you’ll have to rely on the government’s disability support pension which only pays out a small amount per week.
If you’re planning on getting an income protection policy, you will need to think about:
The Waiting Period
Income protection policies will usually have a waiting period. This waiting period is the time that you have to be non-working before the insurance takes over. The waiting period can be anywhere from two weeks to two years. So the question you need to ask yourself is how long can you go on without your income. If you have plenty of savings in the bank, a three-month waiting period might work for you. But if you have little savings and have to pay a huge mortgage then you might need to opt for a shorter waiting period. But remember that the length of your waiting period will also affect the cost of the insurance. A shorter waiting period equals more expensive insurance premiums.
The Benefit Period
The next thing you have to decide on is the benefit period. How long do you want your insurance to cover your salary? You will usually choose a particular length of time, such as two or five years or opt to receive money until a certain age. The length of your benefit period will affect how much your insurance will cost.
But remember, unlike other personal insurance, the premiums for income protection insurance are a tax-deductible expense. Fundamentally, you’re going to get back a portion of the fee back as a tax refund.
The Axiom Risk team is well qualified, having worked in banking/financial planning industry for more than 25 years collectively.
Contact us today on (08) 7231 1412 for a confidential and personalized discussion about your individual circumstances and requirements or visit our Risk Insurance Adelaide Website.