Exploring income protection insurance

A break from work is something people dream of, until it’s a break caused by illness or injury. How would you pay the bills? It’s an important question to ponder, especially if you have big financial commitments or people that rely on your income. The good news is, you have access to income protection insurance through your super.  

In this article, we’ll explore

  1. Understanding Income Protection
  2. Assessing your coverage needs
  3. Cost efficiencies.

In a nutshell, income protection insurance is like a financial safety net, catching you if illness or injury threatens your salary, by replacing it while you recover. And, if any of the following sounds familiar, then it could be your saviour.  

  • Got a mortgage or other debts with regular payments? 
  • Taking care of a partner/family, or is anyone depending on your salary? 
  • Hustling as a freelancer, small biz owner, or contractor with no sick leave safety net? 
  • Running low on savings or emergency funds? 

How much money can income protection provide?

If life throws a curveball and you’re unable to work, you could get up to 87% of your monthly income, with 12% topping up your super so your balance keeps growing too. 

Payments kick in after your chosen waiting period (30, 60, or 90 days) and keep rolling during your benefit period (2 years, 5 years, or until age 65) while you're out of action.

Working out the perfect cover for you 

When it comes to figuring out how much income protection cover you need, a good place to start is reviewing your expenses over a few months. Then, prepare a budget to work out how much money you’d need to replace your regular income. Remember you’d have medical costs to cover too, so your overall needs may also depend on your private health insurance cover status.

Next, choose your preferred benefit and waiting periods. Opting for a longer benefit period offers extended protection, but it comes at a higher cost. As for the waiting period, a shorter one means benefits kick in earlier, while a longer one is cheaper but delays benefits. To make the best choice, think about your leave entitlements, savings, and emergency funds you could tap into if needed.

The price tag

You can use our Insurance calculator to estimate yearly and weekly costs based on your income, waiting period, benefit period, and occupational category.

If you opt in, your insurance fees will be deducted from your super account, not your take-home pay. However, it will affect your super balance so make sure you factor this into your overall plan.

Before you take the plunge, here’s your to-do list: 

  1. Double-check your existing insurance cover, whether it's in your super or elsewhere. You can check any cover you hold inside CareSuper in MemberOnline
  2. Have a read of your Insurance Guide for the full detail on what income protection insurance is, what it’s not, and the T&Cs
  3. Review your actual needs whenever your life changes, to ensure your cover is still a good fit.
  4. Need a guiding hand? Our financial advice service is here to help, at no extra cost. Book a call-back or call us on 1300 360 149.  
  5. All set to go? You can apply for insurance cover through MemberOnline or via the relevant form, if you decide to go ahead.  

See here for more info about income protection insurance.

Information correct as at 10 April 2024.

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