Income protection

Safeguarding your biggest asset

Your ability to earn an income is your most valuable asset. In the event of an accident, illness or major trauma, income protection insurance is designed to cover your ongoing expenses and ensure that the event is not more distressing than it needs to be.

Typically, income protection insurance pays up to 75 per cent of your income in a monthly benefit. The length of time you receive payments depends on the contract term of your coverage. If you are unable to return to work, your coverage can pay up to age 65, depending on your occupation and type of policy.

Income protection can be particularly relevant to a young single person without dependents who is therefore less likely to need life insurance, but has debt and ongoing financial commitments to meet.

Two types of income protection insurance

Indemnity and agreed value are the two types of income protection insurance. Indemnity policies can be provided by your superannuation funds and are adjusted to incorporate fluctuations in your salary. Agreed value is generally more expensive and pays out the benefit agreed upon at the start of your policy. Agreed value is particularly useful for self-employed people, as it covers you regardless of your employment status at the time of the event. It is also more flexible than indemnity coverage, with extra features.

Choosing the right level of income protection

StrategyOne Financial Planners will help you consider your total living costs including meeting mortgage repayments and other debts, providing for your family and other dependents, and maintaining your assets and investments.

Insurance costs, terms and conditions vary greatly and there are an increasing number of plans that makes choosing the right insurance coverage difficult. You can pay for income protection insurance in stepped or level premiums; stepped premiums start out cheaper, but increase over time, while level premiums typically start out more expensive but stay constant so become the cheaper option after 10 or so years’ coverage.

How a Financial Planner can help

Many discover what’s not covered by their income protection policy too late, including how much will be paid after a claim, and the real cost of their premiums over time. A StrategyOne Financial Planner can help you navigate these issues, and more. We can explain issues such as index-linked premiums, offset clauses, non-cancellable policies, and Guaranteed Future Insurability which may allow you to increase your level of cover without further underwriting.

Let us help you choose the right level of income protection to ensure your responsibilities can be met in the event that you are unable to work.

Financial planning for income protection

Read real life client case studies of how income protection is applicable to:

StrategyOne Advice Network is an authorised representative of Fitzpatricks Private Wealth Pty Ltd, AFSL No. 247429, ABN 33 093 667 595 (“Fitzpatricks”).

This information is of general nature only and is not intended as a personal advice. It does not take into account your particular investment objectives, financial situation and needs. Before making a financial decision you should assess whether the advice is appropriate to your individual investment objectives, financial situation and particular needs. We recommend you consult a professional financial planner who will assist you.