If you have an income protection insurance policy and are unable to work because of sickness or injury, they will pay a portion of the income that you would have earned. Most insurers pay up to 75% of your regular income. This means you can continue to pay your bills and keep up with your life’s routine. Without a regular income, bills can pile up, causing stress for the entire household. Premiums are also tax deductible, with some restrictions.
Features of an Income Protection Insurance Policy
Policies can be customised to suit your needs – A policy purchased from an insurer (as opposed to protection provided by your super fund) can be customised to suit your individual circumstances. Your income protection insurance policy can be adjusted to fit your needs, with the option to increase or decrease your premiums. You can choose a stepped policy, where the premium rises by 10% each year you age, or a level policy, which pays the same premium regardless of how old you get.
Care for a sick child using your Income Protection Insurance – If you have Family Care Cover included in your policy, you can be paid a monthly benefit if your child suffers a serious illness or accident and you need to take time off work to care for them full time. Waiting periods usually apply, be sure to check your policy terms.
You may be eligible for redundancy cover – Your policy may pay you a benefit if you are made redundant and remain unemployed for a set period of time.
Premiums are tax deductible in some cases – In fact, Income Protection Insurance premiums are the only insurance premiums which are tax deductible. However, premiums are not tax deductible if your policy is through your superannuation fund, and premiums are taken from your contributions. If you have a combined income and life insurance policy, only the premiums paid to protect your income are tax deductible.
How can your certified financial planner help you?
Don’t leave it to chance! Being out of work for even a short period of time can have huge consequences for many people, and it can take years to get back to normal again.
Nobody plans to get sick or injured at work – it’s something we always think can only happen to someone else, right? Take this opportunity now to protect your future by talking to one of our certified financial planners, who will determine your level of risk, and help you choose the policy that is right for you.
The information contained on this website is for general information only and should not be relied upon unless you first discuss your circumstances with a Licenced Financial Planner.
Perta Thomson Partners Wealth Management Pty Ltd ABN 51 167 290 931 is a Corporate Authorised Representative (ASIC No.451368) of GPS Wealth Ltd ABN 17 005 482 726 | Australian Financial Services Licence Number 254544