Want the best income protection but don’t know where to find it?
Income protection insurance ensures you and your family don’t endure any financial hardship in the event of serious illness or injury by providing an ongoing benefit of 75% of your regular income, usually paid monthly. This means you can focus on your actual recovery without stressing about covering mounting medical bills on top of your regular living expenses while your earning ability is put on hold.
Unfortunately, Income Protection is not a “one size fits all” type of product and finding the best product is actually a matter of finding a product that meets your actual needs and cover requirements.That said, we will do our best to give you an idea of what to look out for when comparing policies to ensure you get adequate protection that won’t send you broke.
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Full Name*
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Gender
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Smoker
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Date of Birth
Type of Protection
Life Insurance
Income Protection
Current Income
This is your current income. Everyone‘s situation is different so you might also want to discuss with an insurance consultant.
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Occupation*
Self Employed
No
Yes
Level of Protection
Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount.
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What should I look for if trying to find the best income protection?
Agreed value or indemnity value? Agreed value policies pay a benefit based on your income at the start of the policy, which means the level of cover you receive is not affected by any fluctuations in your income. An indemnity value policy is cheaper and requires your income to be verified at the time you make a claim, so it may be affected if you have an unsteady income. This can be a more suitable option for self-employed workers.
How long will benefits last? The benefit period of your policy can be for up to two or five years, or you may continue to receive a benefit until you reach the age of 60 or 65. The more you pay for your policy, the longer the benefit period will be.
How much cover do you need? You will need to calculate how much income you will need to continue to meet all of your ongoing expenses and provide for your loved ones while you are unable to work.
How much does it cost? Your premiums are affected by your age, gender, health status and pre-existing medical conditions, smoking status, occupation, waiting period and the policy you choose. Premiums will vary between insurers so it is worth comparing a number of different options.
Stepped or level premiums? Stepped premiums start out cheaper but rise as you age, while level premiums are determined based on your age when you take out a policy but then remain the same. Level premiums will be more expensive to begin with, but if you’re taking out cover for a long period they will eventually be a cheaper option.
What is the waiting period? This is the amount of time you will have to wait after suffering your illness or injury before you can receive a benefit. These commonly range from about two weeks to one month.
What about if I become unemployed or am retrenched? Unemployment and retrenchment are not included in cover, but some policies will suspend your premiums while you are out of work.
Are the benefits indexed for inflation? Make sure that your policy is automatically indexed in line with the rate of inflation - this will ensure that you maintain an adequate level of cover over the life of the policy.
Can the policy be cancelled? Look for a policy that is non-cancellable, which means that it will be renewed by the insurer every year regardless of changes to your health or whether or not you make a claim.
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More tips to find the best income protection plan for you
What is the benefit period? Determine how long you will want to receive benefits from your policy. Some insurers offer benefits for fixed time periods, such as up to five years, or until you reach a certain age.
What age restrictions are applied? Check to see whether a minimum and maximum entry age apply to your policy. Is there an age when cover expires?
Bundle cover? Can you combine your income protection policy with another form of life insurance if you wish?
What are the built-in features? Are benefits like guaranteed future insurability and automatic indexation built into your policy.
Medical test required? Will you need to undergo any medical tests before you can be approved for cover or will you simply have to answer a few health questions?
How are your conditions covered? How does the insurer treat pre-existing conditions? Will you still be eligible for cover and if so, what sort of special requirements (medical tests, premium loadings etc.) will you need to meet?
Can you adjust your cover? Can you adjust your level of cover at any time? What sort of information will you need to provide when you wish to do so?
Review your policy regularly. Your life and therefore your insurance needs are changing all the time, so it’s important to review your policy each year and check whether it still offers adequate protection.
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What should I look for in the different companies I’m comparing?
Are they financially secure? It’s important to know if an insurer will be able to meet all its financial obligations to policyholders, so check its financial rating to make sure there will be no issue when it comes to paying out your claim.
A long, stable history? Research each insurance provider to find out more about its history and experience in the industry. Make sure you’re dealing with a registered financial institution that understands all the ins and outs of the life insurance business.
Range of policies on offer? There’s certainly no shortage of life insurance companies in Australia, so it’s important you choose one that offers policies that meet your cover needs.
Reputable customer service team? You can tell a lot about an insurer simply from the response you get when you call them. Life insurance is a critical expense for many Australians so you need to know that support and advice will be on hand whenever you need it. Look for companies that offer multiple support options (phone, email, online) and compare the hours during which that support is available.
Value for money? Compare all the features and exclusions on insurer’s policies to work out if you are truly getting good value for money. Cover from a certain insurer might be affordable and even cheap, but if it doesn’t offer all the features you want then is it really worth it.
Straightforward claims process? Look at the claims process that each insurer offers and ask yourself how easy it will be to place a claim. Will help be on hand every step of the way? How do the insurer’s other customers rate its claims handling process?
Proven customer satisfaction? The levels of satisfaction of previous customers offer an excellent gauge as to the quality of a life insurance provider. You can find plenty of reviews and ratings right across the world wide web - just remember not to put too much importance in any one review.
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Any tips to get a great policy but not pay too much?
Keep the following tips in mind when looking for a policy that offers both affordability and competitive features:
Choose an appropriate waiting period. Ask yourself how long you would be able to manage your ongoing expenses for if you were out of work. If possible, use this information to choose a longer waiting period and lower the price of cover.
Choose a shorter benefit period. The longer your benefit period the more you will have to pay for cover, so if you can afford to do so, consider selecting a shorter benefit period.
Choose optional extras wisely. Ask yourself whether it’s really worth your while adding optional benefits to your policy. While the flexibility to tailor a policy to your needs can be great in some cases, the extra cost may be more than is suitable for you.
Consider an indemnity value policy. Indemnity value policies are usually cheaper than agreed value policies.
Choose your premiums. If you’re taking out cover for an extended period of time, level premiums will usually be a cheaper option. On the other hand, stepped premiums can work out to be more affordable if you only want to have your policy in place for a few years.
Stop smoking. Your smoking status has a huge impact on your insurance premiums, so give this nasty habit away today. Not only will it save you money but it could also save your life.
Shop for discounts. Keep an eye out for multi-policy discounts, combined cover discounts, large sum insured discounts, and saving for paying premiums annually rather than more frequently.
Review your policy regularly. You may need to decrease your level of cover or you may find that there is another policy available on the market that offers better value for money.
Compare policies. Don’t just select the first policy you come across; compare the options from several insurers to see how they stack up against the competition.
To get expert help, please click on one of the options below:
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Ready to start comparing policies from some of Australia’s leading insurers?
Purchasing income protection is by no means a straightforward process and it’s easy to get bogged down in the different policy options, benefits, payment structures and add-ons. An insurance consultant can help you assess your situation to find cover to meet your needs while keeping within your financial means.
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*The life insurance products compared on this page are chosen from a range of products, finder.com.au has access to track details from and is not representative of all the products available in the market. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing life insurance products.
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