An income safety net
Income protection insurance, also known as salary
continuance, can help you manage your expenses if you are
unable to work for a certain amount of time.
When purchasing income protection, consider what other types of
life insurance you need as well, such as life cover and total and permanent
Do you need income
Income protection premiums are generally tax deductible.
Income protection insurance replaces the income lost through
your inability to work due to injury or sickness. It is an
important consideration for anyone who relies on an income. It is
especially suitable for self-employed people, small business owners
or professionals whose business relies heavily on their ability to
Choosing an income
Each income protection policy has its own definition of
disability and range of benefits. Income protection usually offers
cover for up to 75% of your gross wages for a maximum time period
(e.g. 2 years or to age 60). Income protection policies may be
or level, make sure you understand what sort of policy you are
Case study: Bob cuts his
Bob wanted additional income protection insurance so he paid
more money through his super fund to get the maximum cover. After
realising he had 10 weeks of annual and sick leave up his sleeve,
he opted for a 3-month waiting period to reduce his premium. If he
ever needs to make a claim, he can cover the first 3 months with
his saved leave payments.
You will need to pick a waiting period when you select your
level of cover. This is the period of time (often 30 to 90 days)
before you can make a claim.
Take into account your leave balances (e.g. annual, sick and
long service leave) and access to emergency cash when choosing
your time period.
Many super funds offer income protection. To see what cover is
- Contact your super fund by phone or through their website
- Check your member statement
- Read your product disclosure statement (PDS)
Things you need to tell your
You need to tell your insurer anything that could affect their
decision to insure you when you are applying for, renewing or
changing a life insurance policy. You also need to tell the life
insurer about things that have happened between the time you apply
and when the insurance cover starts.
Some insurance companies need you to give them details of your
medical history. If you don't have the information they require you
can get it from your doctor. If you don't give the insurer this
information they may refuse your claim and this could affect any
life insurance you apply for in the future.
Making a claim
If you need to make a claim on your income protection policy,
you will need to provide evidence of your illness or injury. Ask
your insurer exactly what they need from you so your claim gets
processed as quickly as possible and there's no confusion.
The income protection payments you receive from a successful
claim will be for the period you are unable to work, in line with
Income protection gives you a steady source of
cash in case you get injured or sick and cannot work. This means
you can focus on getting better and not on how you're going to pay
Last updated: 28 Jul 2016