Taking out income protection insurance can be a great way to get back on your feet financially after an injury or illness keeps you off of work for a while. However, finding a policy that's just right for you can take time and effort when there’s a wide range of options available. That's where Savvy can help. Start the comparison process with us today by taking out a free, no-obligation quote!
Why compare life insurance through Savvy?
We’ve partnered with Compare Club to bring you a range of life insurance policies to help you compare them side by side.
What does income protection insurance cover?
In terms of the events which may lead to an insurance claim, income protection insurance typically includes cover for:
- Injury: if you break your leg or take a stumble and you're out of action for a while, your income protection insurance can cover the cost of taking time off work for an extended period, provided your circumstances qualify for coverage.
- Illness: if you need to take extended time off work as you recover from an illness for treatment this coverage may allow you to continue to receive part of your income so you can focus on your recovery. This could be anything from mental health to recovering from a heart attack.
As mentioned, income protection insurance can offer cover in the form of an ongoing benefit worth up to 70% of your income. However, insurers will have terms and qualification points you’ll be required to meet, such as the consistency of your income and whether it falls within their set maximum. As such, it’s crucial to compare policies and read product disclosure statements (PDS) to determine what can and can’t be covered.
However, there are some illnesses, injuries and other situations which income protection won’t cover. These vary from insurer to insurer, so it’s best to read the policy document carefully before you sign up, but can commonly include:
- Self-inflicted injuries
- Normal pregnancy and maternity leave (however, if you suffer from long-term complications relating to your pregnancy, you may qualify for coverage)
- Some elective surgeries
- Redundancy or loss of work
- Injuries or illnesses as a result of the misuse of alcohol or drugs
- Injuries or illnesses as a result of illegal activity
- Injuries or illnesses as a result of war or civil unrest
How do I compare income protection insurance policies?
There are many factors to consider when taking out an income protection insurance policy, which is why it’s important to compare your options carefully through Savvy. Some of the key areas to consider include:
Inclusions and exclusions
Of course, it’s crucial to consider what is and isn’t covered by your income protection insurance policy. This will help you gain a greater understanding of which events you can be covered for and, crucially, which may not be included in your policy. Comparing PDS documents with different insurers will help you determine which policies offer coverage most pertinent to your needs.
Benefit periods
It’s also essential to make sure your preferred benefit period is supported by your insurer. Whether you decide to cover yourself for one, two or five years after your claim (or up to the age of 65), consider different offers to determine which ones can offer the protection you’re looking for in the event of a claimable incident.
Benefit limits
Additionally, it’s worth looking at how much you may be able to receive as a benefit should you be required to make a claim. While you can generally be paid up to 70% of your income over your benefit period, this won’t necessarily be the case for everyone, so it’s worth comparing on this basis also.
Waiting periods
A waiting period in income protection insurance is the amount of time you’re out of work before you can start receiving your insurance benefits. Depending on your insurer, you may be able to choose anywhere between 30 days and two years, though this will also depend on you meeting their specific qualification criteria.
Policy cost
Finally, while coverage is perhaps the most important area to get right, it’s still valuable to compare policies based on price to help ensure you aren’t overpaying for your insurance. The cheapest quote may not always be the best if it doesn’t afford you the cover you’re looking for.
What factors can influence the cost of my income protection insurance?
Plenty of variables play a role in shaping the cost of your policy, including the following:
- Age: older individuals tend to pay more for coverage than younger people
- Employment: those deemed to be working in a high-risk occupation are likely to pay more than others in lower-risk jobs
- Medical history: pre-existing conditions may inflate your premium
- Lifestyle: smoking can significantly increase the cost of your insurance
- Income: the more you earn, the more you’re likely to pay
- Benefit period: longer benefit periods will likely result in costlier premiums
- Waiting period: the longer your waiting period, the less you’re likely to pay for your insurance
Pros and cons of income protection insurance
Pros
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Provides a revenue source if you can’t work
If you're unable to return to work due to an injury or illness, income protection insurance can help you continue to pay the bills up to a period you specify when purchasing your policy.
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Flexible coverage
Income protection insurance is reasonably flexible, allowing you to tailor your policy depending on you and your family's individual needs in areas such as your benefit size, benefit period and the waiting period.
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Tax-deductible premiums
The payments you make on your income protection policy premiums are generally tax-deductible, whether inside or outside super, which could allow you to claim back what you've spent at tax time.
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Greater peace of mind
If you suffer from a covered injury or illness, you can be more secure in the knowledge that your funds won’t entirely dry up, enabling you to focus more on your recovery.
Cons
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Not all health issues are covered
As with all insurance, companies will outline a list of exclusions, meaning there’ll be some circumstances where you wouldn’t be covered for your injury or illness.
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More expensive
Compared to other policies, such as TPD insurance, income protection is more expensive. This is because you're afforded a broader range of coverage than other types of insurance.
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Pre-existing conditions may cost you more
If you have a pre-existing medical condition, you're likely to pay a higher premium, as your insurer may deem you to be at a greater risk of making a claim.
How to buy a life insurance policy through Savvy
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Get a quote
Tell us about yourself and the policy you’re after, such as your date of birth, contact information, whether you smoke, your job and how much coverage you need.
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Compare your options
Compare offers and premium estimates from trusted Australian insurers. After you’ve picked one, you can schedule a call back with a specialist to talk through your policy.
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Purchase your policy online
If you're happy with everything, you can go ahead and complete the purchase online with the relevant personal and payment details. It really is that easy!
Top tips for getting the best income protection insurance
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1. Compare income protection insurance with Savvy
There are plenty of income protection insurance policies on the market. By comparing with Savvy, you’ll be able to consider a range of offers from leading Australian providers. This enables you to compare benefits, inclusions and the cost of premiums from top insurers and policies before you buy your insurance.
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2. Look at the limits
It's best to make you and your loved one's financial security the focus. This includes checking benefit limits and what types of expenses they'll cover. For instance, if your partner is earning enough to support your family while you’re off work, you may not need the full 70% maximum benefit (if you qualify to receive it).
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3. Consider you and your family's needs
Income protection insurance policies can pay you up to 70% of your normal wage while you're recovering from your accident or injury. However, it’s important to pay close attention to the benefit limits, as it’s important to give yourself as much as you need to get by while you’re off work.
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4. Check out some of the extra benefits
While the main game of income protection insurance is to provide you cover if you can't work, some providers may also offer you further benefits as part of your coverage. This can include things such as worldwide cover, death benefit or inflation-proofing, which increases your cover in line with inflation.
