To buy income protection or not to buy income protection?

To buy income protection or not to buy income protection

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Should you invest in income protection insurance? The answer is most likely yes. Income insurance is just that: should you be unable to earn your income because of illness or injury, your income insurance would begin paying out for up to two or five years or until you reach retirement age (currently 65), the three most common terms in Australia. Income protection will cover you for up to 75% of your current gross salary in Australia.

How much can you expect to pay for income protection? Premiums vary from insurance company to insurance company so be sure to compare. Your age, salary, and health condition will affect premium rates. Whether or not you smoke will also make a difference in your income insurance premium. If you have smoked in the past 12 months, your rate will be higher. Thankfully, if you quit smoking you can have your premium rate reduced after 12 months.

Other things that may affect your income protection premium rate include your occupation and your job description. Dangerous jobs or jobs that involve some sort of risk like those in the mining and construction industries will mean higher premiums for you because there is a greater likelihood you will be injured or fall ill and use your income protection.

It's generally considered that income protection insurance costs about one week of your salary per year in Australia. You will be happy to know that income insurance premiums are tax deductible.

You may want to consider shopping around for your income insurance via an insurance comparison website. On these websites you will input some of the above information and the website will give you a quote from many if not all major Australian income protection insurance companies. They may also give you additional information and conditions on the policy they're offering you. A bonus to buying your income protection from a comparison website is that some of them offer you a cash rebate or discount for your first year's premium for signing up through them. Be sure to see what offers available when you are looking at income insurance websites.

Some companies allow you to choose between a basic and a comprehensive policy. The comprehensive policies will give you added benefits to your income insurance. Income protection is generally available to all workers aged 64 and below. Though you can receive an income insurance payout for two years, five years, or until you reach 65, your income protection will cease if you are able to return to work before that term is up.

If you can think for a second how much money you spend each year, it becomes clear that income protection is vital to the livelihood of yourself and your family.

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