Income Protection – What Is It & Do You Need It?

Income protection will support this family if their main income earner is unable to work due to illness, injury, or permanent/temporary disability.

Have you ever thought about what would happen to you – and your family – if you suddenly found yourself unable to work?

It’s an unpleasant question to consider. But it’s an important one, and it bears thinking about. Ultimately, the question is: would you be able to support your family if you were injured or sick or temporarily disabled and needed to take several months (or several years) off work?

What Is Income Protection?

Income protection insurance (aka salary continuance) is a form of life insurance that can help provide you with an income to manage your expenses if you’re unable to work for a certain period of time.

Unlike other lump-sum life insurances, income protection is paid as a monthly benefit. Itpays you up to 75% of your income, and covers you for accidents, illnesses or major traumas.

Important Details To Consider

Each income protection policy has its own definition of disability and inability to work, and its own range of benefits. Some important options you need to consider when choosing an income protection policy include:

• The waiting period – this is the amount of time before you can make a claim.  It can be anywhere from 30 days to 2 years.
• The benefit period – this is the length of time income payments will be made. Generally, your benefit period will range from 2 years to age 70.

Income protection pays you up until you return to work (after your waiting period) or, if you can’t return, up until the benefit period.

In Australia, income protection is tax deductible and designed to ensure you can continue to pay your mortgage and general household expenses, and otherwise carry on financially until you’re able to return to work.

Do You Need Income Protection?

Income protection is an important part of an insurance portfolio for anyone who is their family’s main income earner, or anyone who relies on the income from their ability to work – especially business owners and sole traders.

Are You Covered?

If you would like to find out whether you have appropriate and accurate income protection cover in your life insurance portfolio, then you need to speak to a qualified financial planner.

If you would like a review of your income protection insurance from K2 Wealth, call us today on (07) 3368 2002.

Information current as at 12 March 2015
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.