Explainer: Income Protection Insurance


When you think of insurance, it may sound strange to have cover for something that you cannot see or touch, such as your income. But, what if you were no longer able to work, how would you continue to repay your mortgage and live your current lifestyle?

Insurance is commonly thought of as an added bill involved with owning a car, protecting a home or owning a business. At first glance, income insurance may seem like a costly preventative measure that may not prove to be useful.

However, think about how your lifestyle would be impacted if you happened to lose your income. Assets such as cars and houses can be regained, although the loss of income, possibly for life, may see both lost.

Income protection insurance will cover your salary loss due to an illness or injury. Unlike government benefits, income protection pays in accordance with your earning capacity. And, unlike workers compensation, income protection covers an injury or illness at any time or place. Furthermore, with cover through worker’s compensation, the injured individual will receive a higher rate for the first few weeks, however, then it drops. Consequently, people’s standard way of living is impacted if they depend on this form of protection.

Just like car insurance, income protection policies vary in regards features, benefits and terms and conditions. Usually, income insurance providers will offer 75 per cent of gross wages for a maximum period. This type of insurance is particularly important for people who have regular loan repayments.

The most important reason for income protection is when an individual strongly relies on their income. For example, a person with a family or a mortgage should strongly consider income protection. By having income protection in place, someone who is no longer able to work due to illness or an accident, won’t have to stress of defaulting on mortgage payments, personal loans or credit cards.

Having income protection could be the difference between
continuing to lead your current lifestyle after an accident or illness or being urged to dramatically alter your lifestyle due to not being able to afford debt repayments.

Today, people are under enough stress with the rising price of housing and the economy. Having income protection in place allows you to have some peace of mind in knowing that protection will work when you can’t.

It’s time to consider how you will continue to make your home loan repayments if you were unable to work for a period. We can help you find the right provider to make sure your investment in your property is protected. Give Scott a call on 0412 092 107.