expertidiot income protection

Australian Income Protection Advice – Who Provides The Best Cover?

Income protection insurance is worth considering for freelancers and those who are directly employed and are dependent solely on earnings. Loss of income due to illness or disability can result into a big problem with a family’s finances. Bills have to be paid on time as well as mortgages and you cannot use illness or disability as excuse for your inability to pay. Income protection insurance in Australia is designed to pay 75% of the earnings for temporary inability to work due to illness and disability but since there are lots of insurance companies with varying policies, it makes sense to seek for Australian income protection advice.

How much does income protection cost?

Premiums are set based on different factors and it is important to shop around for quotes to determine which will provide the best cover for your needs.

  • Age – the older you are the higher will be the premium payments because it is assumed that you are more vulnerable to illnesses and eventual disability
  • Gender – no insurance company must charge a higher or lower premium for men and women for the same policy.
  • Health and pre-existing conditions must be revealed before a cover is taken because the claim might be rejected if it is found out that there was intentional omission of the true medical condition. Pre-existing conditions can be excluded from the cover or the application can be rejected.
  • Smoking – most insurance companies charge 50% more premiums from an individual who smokes because he is more vulnerable to serious illnesses
  • Occupation – there are different types of occupation that are considered for income protection. High risk occupation means higher premium than low risk occupations. For example, more risks are faced by a miner or construction worker than an accountant or a computer programmer.
  • Waiting time – is the length of time you are unable to work before you make a claim for income protection. The longer the waiting time the lower will be the premium. When deciding on waiting time, you have to consider the sick pay that is paid for illnesses and the state benefits that you will receive. You can also consider the amount of savings you have set aside for illness or disability so that you will not be overburdened by the high cost of premium payments.

The importance of making comparisons

When comparing insurance companies, it is important to consider what is going to be paid and what will be excluded from the cover. How much will be the cost of premiums 5 years from now? How much is the expected increase of premiums if coverage will be increased due to a job promotion with a higher salary? Will the insurance company reassess your medical and health conditions for each renewal? Look carefully at the fine print of the policy whether it includes the offset clause that will allow the insurance company to reduce payouts if there is additional income like sick pay or state benefits. Reading the fine print can make a difference when it comes to insurance pay outs.