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Protect Your Income with Income Protection Insurance

Safeguarding Your Financial Future

For most Australians, their income is their greatest financial asset. It’s what allows you to pay your bills, meet your mortgage repayments, support your family, and maintain your lifestyle. But what happens if an illness or injury prevents you from working? Without a regular income, your financial stability could be at risk. This is where Income Protection Insurance comes in—a safeguard to protect your financial wellbeing during challenging times.

What Is Income Protection Insurance?

Income Protection Insurance provides a regular income if you’re unable to work due to illness or injury. It typically covers up to 70% of your pre-tax income, helping you continue to meet your financial commitments until you’re able to return to work. This type of insurance ensures that even if life takes an unexpected turn, your day-to-day expenses, mortgage or rent, bills, and family responsibilities can still be managed.

Why Do You Need Income Protection Insurance?

  1. Unpredictability of Life Events: No one plans for illness or injury, but these events can strike anyone at any time. In Australia, 1 in 5 people will experience a major illness before the age of 65, and many of these will face significant periods of time off work. Without income protection, you may need to dip into savings, sell assets, or rely on government assistance, which might not be sufficient to cover your expenses.
  2. Financial Security for You and Your Family: If you’re the primary income earner, your family relies on your ability to work. Income protection ensures that your loved ones aren’t left struggling financially if you’re unable to bring in an income.
  3. Maintaining Lifestyle and Long-Term Financial Goals: With income protection, you can keep up with your mortgage repayments, pay school fees, and continue building for your future, even if you’re not earning your usual wage.

How Does Income Protection Work?

Income protection insurance provides a monthly benefit, usually up to 70% of your pre-disability income. The payments continue until you are able to return to work, or until the end of the benefit period outlined in your policy (this could be two years, five years, or until you reach retirement age).

There’s typically a waiting period, ranging from 30 to 90 days, before payments begin, so it’s essential to consider how much you have in savings or other sources of income that could bridge this gap if necessary.

What Does Income Protection Cover?

Income protection insurance generally covers a wide range of illnesses and injuries that could prevent you from working, including both physical and mental health conditions. However, coverage can vary based on the policy. It’s important to speak with a financial adviser to ensure your policy is tailored to your specific needs and circumstances.

Australian-Specific Data on Income Protection

In Australia, income protection is available through both standalone policies and superannuation funds. However, many Australians are underinsured when it comes to income protection. According to Rice Warner, around 70% of Australians with superannuation have some level of income protection cover, but it’s often inadequate. It’s important to review your policy to ensure it provides sufficient coverage, especially if your lifestyle or financial obligations have changed since you first obtained it.

Additionally, ASIC highlights that the majority of policyholders with income protection insurance through superannuation receive payouts only until the age of 65, and there can be limitations on the level of cover offered. This makes standalone income protection policies an attractive option for those looking for more comprehensive coverage and flexibility.

How Much Does Income Protection Insurance Cost?

The cost of income protection insurance can vary depending on several factors, including your age, occupation, health status, lifestyle, and the amount of cover you need. Higher-risk occupations or pre-existing health conditions may result in higher premiums, but the peace of mind knowing that your income is protected can far outweigh the cost.

In Australia, income protection insurance premiums are usually tax-deductible, which can make it a more affordable option than you might think. This tax benefit provides an added incentive to secure your financial future through income protection.

Key Benefits of Income Protection Insurance

  1. Peace of Mind: Knowing that your income is protected if you’re unable to work provides immense peace of mind.
  2. Customisable Cover: Income protection policies can be tailored to suit your specific needs, including choosing your benefit period, waiting period, and level of cover.
  3. Tax Deductibility: In Australia, premiums for income protection insurance are tax-deductible, providing an additional financial benefit.
  4. Support During Difficult Times: Should you become unable to work due to illness or injury, income protection gives you one less thing to worry about, allowing you to focus on recovery.

How to Choose the Right Income Protection Policy

When selecting an income protection policy, it’s important to compare the features and benefits offered by different providers. Key considerations include:

  • Waiting period: How long you’ll need to wait before you start receiving payments.
  • Benefit period: How long the payments will continue (e.g., two years, five years, or until you reach age 65).
  • Level of cover: The percentage of your income that the policy will replace (typically up to 70%).

Consulting with a financial adviser or insurance broker can help you understand your options and select a policy that suits your needs and financial goals.

Speak to a Shore Financial Insurance Specialist

At Shore Financial, we understand the importance of protecting your most valuable asset—your income. Our expert insurance specialists can guide you through the options available and tailor an income protection policy to suit your individual needs and financial situation. Don’t wait until it’s too late—safeguard your financial future today.

Contact Shore Financial to speak with one of our specialists and find the right income protection solution for you.






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