FAQ About Income Protection

Why does the insurance company pay only 75% of my income? Why not 100%?

The income protection plan can only insure and pay up to 75% of your income. The reason for this is because if the insurance company was to pay a full 100% or any amount higher than 75%, whilst someone was on claim it may decrease the motivation for someone to go back to work as they would be on close to there full wage. People may also intentionally hurt themselves if income protection paid a full 100% or close to, as they wouldn’t have to work and would also be receiving the same amount of income.

Can anyone receive income protection insurance or is there an assessment criterion?

Income protection plans are based on a client’s age, gender, smoker status, occupation details, medical history and habits & lifestyle. Within an application, there is a list of questions which relate to these things. From there, the insurance company underwrites the insurance application and depending on what is disclosed within an application will determine whether or not the client is eligible for the cover.

Can I change or alter my income protection insurance plan once it is in force?

Yes you can. The insurance company will allow you to decrease the amount insured at any point in time. They will also allow you to increase the waiting period or decrease the benefit period as this is not a risk from an insurance company’s perspective. However, if you wanted to increase the amount insured, decrease the waiting period or increase the benefit period, the insurance company will re-assess the alteration application and re-ask you a list of medical questions to ensure that there has been no recently suffered medical conditions or changes within your lifestyle or occupation. Once they have this information, they will make  the assessment on whether or not they can accept the increase or alteration.

If I was to become totally and permanently disabled would the insurance company forfeit my policy and stop paying me?

No they would not. The insurance company takes on that risk when offering you the income protection plan that people can actually sustain total and permanent injuries. As soon as the insurance companies offer you the cover, it is 100% guaranteed renewable until the policy expiry date. At any point in time, the insurance company can not forfeit the insurance policy until the policy expiry (unless in the event of a claim and there was non-disclosure on an application found, however in this case your paid premiums over the term of the insurance policy will be refunded).

If I was to take out TPD and Trauma insurance, wouldn’t it overlap with income protection insurance?

When taking out Life, TPD and Income Protection insurance you may feel as though you are overlapping the insurance. There is no right or wrong answer to this; it is really dependent on an individual’s opinion at the end of the day as everybody has different views on the insurance. However, in the event if you were to become totally and permanently disabled, the lump sum pay out works as a financial consequence of a disablement. You also may have other expenses associated with the disablement, such as changes to your house, car ect. Sometimes these things can work out to cost a lot of money.

Where as, income protection is designed to secure your income. If you were to suffer a traumatic event such a serious illness or permanent disablement, the income protection is designed to secure and continue your income.

> Get an Income Protection Quote