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Income Protection Insurance Guide

Income protection insurance is a type of protection insurance designed to provide you with an income stream if you are unable to work for a certain period of time due to an accident or illness. Income protection insurance provides you with a monthly payout (usually 75% of your income) for a designated benefit period and can provide a much needed backstop if normal working activities are disrupted due to an unforeseen event.

Who is it suitable for?

Income protection insurance is suitable for anybody who cannot afford to be without an income for an extended period. This is particularly important if you have other people who also depend on your income, including your spouse or children.

How much should you insure yourself for?

The amount you should insure yourself for depends on the level of your income and the amount you could survive on should you need to. Our income protection insurance calculator may help you determine the correct amount. Generally income protection insurance payments are 75% of your income or anything up to $60,000 a month depending on your level of income.

What is insurable income?

Insurable income includes your salary but can also include fringe benefits, bonuses and superannuation payments. If you are self-employed any income you receive through your own efforts (rather than passive income streams such as shares or investments) can be included in your overall income estimate including superannuation and directors fees.

How to structure your policy

There are a number of different ways to structure your income protection insurance policy and it is a good idea to consider seeking professional advice as the process can get extremely complicated. There is a vast array of different income protection policies available with multiple combinations of waiting periods, benefit periods and features.

Some policies are more structured while others can be tailored to meet your individual circumstances. A good general suggestion is to choose the policy with the shortest waiting period, the longest benefit period and the most comprehensive features.

How much does it cost?

The cost of income protection insurance can vary widely depending on the policy and the number of features and benefits. As a rough guide you can generally expect to pay up to 2% of your income on premiums although costs can vary according to certain risk factors including age, general health, lifestyle and occupation.

How do I claim?

To qualify for an income protection insurance payout you need to fulfill three main criteria:

  • Seeing a doctor due to illness or an accident
  • Not working
  • Cannot undertake at least one important occupational duty

Some insurance companies offer an ‘hours’ based definition where you can still work up to 10 hours per week and they will pay you your full income protection benefits.

Claiming income protection insurance can be made a lot simpler with our priority claims process which is available to you when you purchase a policy through us. Need more info check our links below:

Income protection insurance for Tradesman

Income Protection for self employed

Income Protection Insurance for Doctors

Income Protection Insurance and Tax benefits

How to compare Income Protection

Accident Insurance

Income Protection Insurance and Guarantee of Renewability

Income Protection Insurance – How do I structure my policy?