By Simon Keir, Westlawn Senior Insurance Specialist 22 April 2015
Have you thought about what would happen to you and your family if suddenly you found yourself unable to work?
Would you be able to support your family if you were injured or sick and needed to take several months off work? Income protection insurance, sometimes known as salary continuance, can help provide you with income to manage your expenses if you’re unable to work for a certain amount of time.
Unlike other life insurance policies that are paid as a lump sum, income protection is a monthly benefit that pays you up to 75% of your income and covers you for accidents, illnesses or major traumas. It pays you up until you return to work (after your waiting period) or, if you can’t return, up until the end of the benefit period. This can be up to age 65 depending on the policy and your occupation.
Income protection is tax deductible and is designed to ensure that you can continue to pay the mortgage, general household expenses and carry on financially until you’re able to return to work.
It’s an important part of an insurance portfolio for anyone who is the main income earner for their family or for anyone who relies on the income from their ability to work especially self-employed people or professionals.
Each income protection policy has its own definition of disability and range of benefits. Some important options you need to consider when choosing an income protection policy include:
Waiting period – this is the amount of time before you can make a claim. It can be anywhere from 30 days to 2 years.
Benefit period – this is the length of time the income payments will be made. Generally the benefit period ranges from 2 years to age 65.
Managing your insurance
Insurance is about protecting yourself and your family, or your business, from a loss which you wouldn’t otherwise be able to financially recover from. However, insurance is not simply a set-and-forget purchase. Although it does provide a level of peace of mind, changes often happen in your life that need to be taken into account if you want to properly protect what’s important.
Many Australians who don’t properly manage their insurance portfolio find themselves in a situation where they are underinsured – but don’t know it until it’s too late.
When purchasing or renewing existing insurance be sure to consider any changes that may have occurred in your circumstances. Changes may include:
Having a baby
Purchasing a new house or investment property
Receiving an inheritance, or
New occupation or salary.
To find out whether you have appropriate insurance cover to protect your family, give me a call on (02) 6622 5590 or 0409 606 644 and we can arrange a time to chat.
The advice is general in nature only. Before acting you should consider the appropriateness of the information having regard to your personal objectives, financial situation and needs. You should read the relevant Product Disclosure Statement (PDS) and Policy Document before making any decision about a product.
Westlawn Life Insurance Pty Ltd ABN 91 164 146 285 is a Corporate Authorised Representative (No. 444800) of ClearView Financial Advice Pty Limited ABN 89 133 593 012 AFS Licence No. 331367 GPO Box 4232, Sydney NSW 2001.