You work hard but the fact of the matter is: life happens. Whether you’ve fallen ill or suffered a workplace injury, there may come a time when you are suddenly and unexpectedly unable to work. Unfortunately, your expenses won’t stop when you do. That’s where income protection insurance comes in.
What are my options for income protection insurance?
Income protection policies provide monthly benefits of up to 75 per cent of your income, alleviating many of the financial pressures that follow an illness or injury.
When it comes to selecting a policy, there are two options to choose from:
- Agreed-value policy: With an agreed-value policy, you confirm income and benefit amount at time of application, effectively locking in to a pre-determined monthly payment and timeframe. People who are self-employed or are concerned about income fluctuations may consider this option.
- Indemnity policy: With an indemnity policy, you report income at time of claim, and benefits are paid in proportion to your current earnings. Business owners who have steady income may prefer an indemnity policy, as there is less risk of an income drop between applying for cover and filing a claim.
When purchasing or comparing an income protection policy you will need to consider what is an appropriate benefit and waiting period for you.
What types of premiums are there?
Insurance premiums generally increase as you get older because you are more likely to make a claim. When choosing a life insurance policy, you may have the option to choose between stepped or level premiums.
- Stepped premiums increase as you get older, but cost is generally cheaper at the beginning. However, it is important to consider rising costs over time.
- Level premiums, on the other hand, are generally more expensive at the beginning, but much more consistent over time.
There are benefits to both types of premiums. Talk to the team at Lifebroker to find out more about different premium types.
This website offers General Advice only and does not consider your personal objectives, financial situation or needs. Before you purchase a product, it is important to read the relevant Product Disclosure Statements to consider if the product is appropriate for you.