INCOME PROTECTION INSURANCE

//INCOME PROTECTION INSURANCE
INCOME PROTECTION INSURANCE 2017-02-10T11:35:57+00:00

HOW DOES IT WORK?

If you have trouble living within your income now, consider living without your income!

Many people insure their home and their car, but fail to insure their most important asset – their ability to produce an income. People fail to realise the value of their ‘working’ life.  It supplies the capital that fuels the lifestyle that you and your family enjoy, not just now, but well into the future.

Income Protection insurance aims to minimise the financial impact of sickness or injury by replacing income lost during a prolonged absence from work. A monthly benefit will assist you to meet living expenses and debt repayments.

Income Protection policies will usually pay a benefit up to 75% of your gross income (some policies may pay higher) after a waiting period. Payments continue for a set term or until you return to work. Generally premiums for income protection are fully tax deductible.

Waiting period: This is the time period that you must be off work before an income benefit is payable. Waiting periods range from 14 days to two years. Generally, the longer the waiting period, the lower the cost of the income protection insurance.

Benefit period: Starting at the end of the waiting period, the benefit period is the maximum time the benefit is paid. Options range from two years, five years or until a specified age such as age 65.

TYPES OF CONTRACTS INCLUDE:

Agreed value: The monthly benefit is agreed at the time of application and will not reduce even if your income decreases after your policy commenced. This option provides certainty and peace of mind on how much income you will receive. If details of your income are provided at the time of application the benefit can be guaranteed so that no further financial assessment is required at the time of claim.

Indemnity value: The monthly benefit paid depends on your earnings at the time of a claim rather than at the time of application. If your income at the time of claim is lower than it was when the policy started, the monthly benefit may be reduced accordingly. Details and proof of income will be required at the time of claim.

You can generally claim a tax deduction for the premiums paid on an income protection policy to reduce the effective cost but any income payments received are considered taxable income.