Income Protection Insurance in Australia: What You Need to Know

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Only about 30 per cent of working people carry income protection insurance in Australia. That includes those who are insured through their employers and those who are privately insured. However, this insurance is critical to maintaining a quality of life for those who suffer from a long term illness or injury that prevents them from being able to work. What this means is that all of the approximately 70 per cent of people who don’t carry income protection insurance in Australia are not adequately protecting themselves, and their families, against the unknowns of physical health issues.

If you are considering getting income protection insurance in Australia, take a look at the following information. It will help you make the decision about whether or not to get the insurance for yourself.

Benefits

The listed benefits represent only a snapshot of the full range of IPI benefits, and are only intended to provide you with a cursory description.

  • A waiver of the premium option may be available. This would exclude you from having to make your premium payments while receiving the IPI benefits. But, your benefit amount would remain the same.
  • Benefits are paid monthly to ensure that you have a continual income stream while recovering from your injury or illness.
  • Benefits are tax-free.
  • You cannot be cancelled and the insurance company cannot refuse to renew your policy as long as you continue to make your payments.

Restrictions

The restrictions associated with income protection insurance are pretty straightforward. While this is not a comprehensive list, it does acknowledge some of the key points.

  • While receiving IPI benefits, tax relief on pension contributions is no longer available. This is because IPI benefits are non-taxable.
  • You may need to use all savings and sick leave benefits before the IPI benefits will begin, depending on your nominated waiting period.
  • Depending on the insurer, in most circumstances no benefits will be payable for events related to drug and alcohol abuse, wars, pregnancy, or harming oneself.
  • No benefits will be paid if the policyholder becomes unemployed due to something besides illness or injury.

Remember that our health and well being is not guaranteed, and when we leave it to chance we can face certain financial ruin for our families and ourselves.

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