“Risk is like fire: If controlled it will help you; if uncontrolled it will rise up and destroy you” Theodore Roosevelt
Could you support your family if you were injured/sick and needed several months off work? Income protection replaces the income lost through your inability to work. It is a great line of defense and usually a very affordable way to keep risk away from your hard earned wealth and protect your estate over your lifetime.
Here’s some ways to make it more affordable:
- Shop around
- Increase your waiting period with consideration to your savings and accumulated leave
- Review your policies annually to ensure they meet your needs and adjust as necessary.
- Consider paying from within your super fund
Here’s some points to consider when looking at this for your family.
Stepped or level premiums:
- Stepped premiums – Your insurance premium will increase each year as you get older but is cheaper in the beginning
- Level premiums – Your insurance premium doesn’t change as you get older but is more expensive in the beginning
Any or own occupation:
One of the most important provisions in your income protection policy concerns whether you can work in your own occupation – as a surgeon, say – or in ‘any’ occupation.
Some policies specify that you’ll be paid only if you can’t work in any occupation at all; other, more expensive, policies say you’ll be paid out if you can’t work in your own occupation.
And then sometimes policies combine the two – you’ll be paid for the first two years if you can’t perform your own occupation but thereafter only if you can’t perform any occupation.
Choose Your Waiting Time:
You will need to pick a waiting period when you select your level of cover. This is the period of time (often 30 to 90 days) before you can make a claim. Take into account your leave balances (e.g. annual, sick and long service leave) and how well funded your reserves are when choosing your time period.
They are Tax Deductible:
Income protection premiums, when paid out of your nett income, are generally tax deductible. If you claim a tax deduction on the premiums, however, you will need to pay tax on the amount you receive if you make a claim.