Step back a minute and ask yourself: What happens financially if an unexpected event forces me to stop working?
Thankfully, income insurance can protect you financially when an unexpected event forces you to stop working. Income Protection insurance coverage can help replace a percentage of your pre-tax income for up to two years under your policy.
When figuring out how much your benefit payments will be, you need to be sure that you use the right income. You use pre-tax income to calculate your benefit, right? Making the most if it is a whole other story. Consider the following:
How many policies are there?
There are more than 20 different life insurance companies in Australia, so it can be difficult to know which one to choose. Each company has its own underwriting process, so you should compare a number of policies before deciding which policy is right for you.
In addition, the policy details you see on a provider’s website isn’t necessarily the only policy they offer. It’s best to read through the policy details and consider what’s right for you.
Make sure to have direct conversations with providers and learn everything about income insurance policies available. That way you can make an informed decision and pick and choose wisely.
What are the exclusions?
Your health insurance provider may also include exclusions in your policy that prevent payment on some specific types of claims. An exclusion is a policy condition that precludes insurance coverage for specific types of claims.
Income protection insurance can have certain exclusions such as:
Engagement in criminal activities
Self-inflicted harm which leads to a disturbance in work
Some providers may not offer coverage for pregnancy that is not medically necessary. Because they want to support women who need regular pregnancy coverage, some providers will only provide coverage for pregnancy in situations where it is medically necessary. These may be applied based on your application.
What kind of expenses does the insurance cover?
Determine your monthly cost for each essential, such as housing, food, and clothing. Compare the total cost to the 75 percent income figure given at the beginning of this guide. If the expense is lower, you can reduce your insured income benefit. The end result is a plan that fits your income and lifestyle.
What events can trigger a claim?
Income Protection insurance covers only medical conditions that prevent you from working temporarily or permanently. As long as you're still able to do your job, this insurance won't apply.
Insurance policies may exclude certain job circumstances, such as your being fired or quitting. If you're fired or choose to leave your job, your policy won't pay out.
Income protection insurance is very important and incredibly underrated all at once. Sometimes, people have to stop working due to circumstances unforeseen and beyond their control. Consider the following: how many policies there are out there, what the exclusions are and what kind of events can legitimately trigger a claim.
Seeking a finance and insurance consultant that can help you with income protection? Reach out to Swell Financial Planning! We have a number of financial services including budgeting, insurance, investment, cashflow and more.