What is Income Protection Insurance?

Income protection Insurance covers you for a monthly payment of up to 75% of your income if you’re temporarily unable to work due to an accident, illness or major trauma. There is no particular list of events in which you can claim; it is essentially anything that stops you from working, providing very broad protection. Income protection is tax deductible and is designed to ensure that you can continue to pay the mortgage, put food on the table and honour financial commitments until you return to work. You will continue to receive the payments until you return to work or until the end of the benefit period.

Protect your income and lifestyle

Imagine being diagnosed with a serious illness or injury that might keep you away from work for months, or even years. Once your sick leave ran out, where would you obtain the funds to pay your mortgage or rent, or to continue to put food on the table? Without a back-up plan, everything you have worked so hard to achieve could be at risk. The vast majority of insurance policies will pay up to 75% of your specified income at the time in a monthly payment meaning you can continue to meet your financial commitments, maintaining ownership of your home and taking care of loved ones. The value of Income Protection insurance is that it acts as a safety net to ensure that, in times of financial hardship, you and your family can maintain your lifestyle and focus on getting well and getting back to work

What does it cost?

Income Protection Insurance can be more expensive than Life Insurance, but the income protection premiums are tax deductible. Benefit payments, however, are considered income and therefore subject to tax (at marginal tax rates). Premiums generally vary according to the following.

  • Age (premiums may increase or cover decrease as you get older).
  • Gender (rates for females are higher than males).
  • Whether or not you smoke.
  • Occupation (manual based work attracts higher premiums than office work).
  • Waiting period – the time you choose to wait before receiving payment.
  • Benefit period – how long you will receive payments in the event of a claim.
  • Agreed or Indemnity style policy.
  • Minimum working requirements
  • Any extras chosen like ‘Increasing Claims’ etc.

If you would like to discuss how to obtain Income Protection Insurance that is right for you, or would like a quote, please contact us for a complimentary consultation.