Have You Got Income Protection Insurance?

Karen Grainger

Are you at risk of injuring yourself with the activities in your life?

Do you need to insure yourself to cover loss of income due to time off work for injury?

Income Protection Insurance pays up to 85% of your pre-tax income for a period of time if you are unable to work due to partial or total disability. It is designed to replace the income you have lost from not being able to work.

Each income protection insurance policy has its own definition of partial or total disability that must be met before a claim is made.

General income protection insurance is essential for the self-employed, or a small business owner, as generally you do not have sick leave or annual leave to take. It is also curial for those with dependents who rely on this income, and those with debt or a mortgage where regular payments are required.

Income Protection policies are commonly indemnity value policies, unless you purchased your policy before 31 March 2020 which may mean it is an agreed value policy.

Most income protection policies offer a waiting period. Generally, the longer the waiting period the cheaper the policy. If you have sick leave, annual leave or savings, you may choose to have a longer waiting period.

When purchasing an Income protection insurance policy, you can discuss your needs further with a licensed insurance broker, financial adviser or an insurance company.

You will need to consider your age, job, income, medical history, lifestyle and living costs and any high risk hobbies and activities you do.