Things You Must Understand About Income Protection Insurance

Many tradies have thriving occupations and feel confident about their futures and financial stability. However, there are very few circumstances that are predictable in life. All it takes is one mishap or illness to plunge the most skilled and conscientious tradie into financial duress.Because we need to prepare for the unexpected, there is income protection insurance.

What is Income Protection Insurance?

Income protection insurance is a long-term cover that will pay you a portion of your regular salary if you sustain an injury or develop an illness that makes working your usual job impossible.The part of your salary paid to you will vary based on the details of your policy. Generally, it is between 50 and 85 per cent paid to you for a specific amount of time, which can also vary.[caption id="attachment_60149" align="aligncenter" width="1500"]

Income protection insurance can protect you if you sustain an injury or become sick.[/caption]

Why Would I Need Income Protection Cover?

It is human nature to believe that everything will be fine, especially if we do things the right way and are reasonably cautious. However, there are a few reasons that even the most careful people should have income protection cover.

• Many types of work done by tradies are at least somewhat inherently dangerous. Work-site accidents can and do frequently happen, often at no fault of the victim.
• Auto accidents are a sadly common occurrence throughout Australia. It only takes one moment of distraction to change someone?s life forever.
• The need for a routine procedure can impede the ability to work, and a life-altering diagnosis can come at any time. Illnesses cause both physical and emotional devastation to an entire family; an income protection policy can help avoid financial ruin as well.

What Does It Cover?

An income protection insurance policy�will pay you up to 85% of your income before taxes should you be permanently or temporarily unable to work.

Are There Reasons That I Might Not Need Income Protection?

There are some circumstances where you may not need income protection insurance cover. However, you should speak with an insurance expert and go over your finances before opting to dismiss the idea of this sort of cover. Some of the potential reasons to forgo income protection include:

• You can retire early
• You have sufficient savings to live without your income
• Government benefits would be sufficient
• A partner or family member will financially support you
• You have a trauma insurance policy
• You have a sufficient total or permanent disability insurance policy

How Can I Decide if I Need an Income Protection Policy?

The best way to determine if an income protection insurance policy is right for you is to speak with an expert who had experience in the insurance industry. A professional can help you take a thorough look at your finances and make a decision about adding the cover.There are a few questions to ask yourself that can help you make a smart decision regarding an income protection policy. These include:

• Do you have debt that you will not be able to pay if you lose your ability to work? This includes mortgages, car loans, and revolving debt.
• Do you depend on your own exertion to make a living?
• Are you under 60 years of age? (Some policies have different age limits. Ask you insurance professional for specifics)
• Do you have sick leave from your job?
• Do you have dependents who rely on your income?
• Are you self employed?

What Information Will Determine My Acceptance or Premiums?

As with all insurance policies, a number of factors will determine acceptance as well as the dollar amount of your insurance premiums. These details include but are not limited to:

• Age
• Your type of employment
• If you are a smoker or have smoked in the past and quit
• Current health including preexisting health problems, weight, and family medical history
• The percentage of income you want to be covered
• The range of illnesses and injuries you would like covered by the policy
• The waiting period before the policy pays out
• The length of time you want the policy to pay. This can vary and may change the cost of your income protection insurance

[caption id="attachment_60154" align="aligncenter" width="1200"]

Age is a factor when determining your insurance premiums of this nature.[/caption]

What Are Customary Exclusions From This Type of Policy?

You should carefully examine the details of an income protection insurance policy. Most insurance cover has exclusions, and it is best to discover your cover?s limitations before you need to use the policy. Some examples of potential policy exclusions include but are not limited to:

• Preexisting conditions
• You are voluntarily leaving your job
• Pregnancy (except for high-risk pregnancies)
• Injury or illness with a duration shorter than the policy waiting period
• Disability because of mental illnesses
• Injuries that take place because of extreme activities such as rock climbing or snowboarding

Important Facts About Income Protection Insurance

1. You are covered 24/7 regardless of location
2. Your insurance premiums are generally tax-deductible
3. Some companies offer insurance cover that has no waiting period
4. Worker?s compensation is not interchangeable with an income protection insurance policy. Worker?s compensation will cover illness or injury caused by your job. It will not provide cover if you are injured away from work or if your illness is not a result of your job.

The information contained in the post does not replace advice from a qualified professional in the insurance field. The post is not binding advice or recommendation of products or services.