Do I Need Income Protection Cover?

Your ability to earn an income is your most valuable asset. Your lifestyle depends on it. If an accident or illness prevented you from working, how would you cope financially?

Most people wouldn’t drive without car insurance, or live in their house without home and contents insurance. Yet most Australians don’t consider protecting their ability to earn an income.

The risks
• 2.6 million Australians aged under 65 are living with a physical disability i.

• Australians have a one in three chance of being diagnosed with cancer before age 75 ii.

• 690,000 Australians were injured at work between 2005 – 2006, with 43% not receiving any financial Assistance iii.

• More than 60% of Australians will be disabled for more than one month during their working life iv.

• More than 25% of Australians will be disabled for more than three months during their working life v.

The reality
Without an income, mounting debts can cause additional stress. How long could you afford to cover your expenses, without completely draining any savings safety net? A health setback doesn’t have to affect your financial wellbeing. Income protection will compensate you for any time taken off work. Still, many Australians don’t take out insurance protection because of some common misconceptions

“I’ll be covered under Workers Compensation”
Workers Compensation is limited. It only applies if you are injured during working hours or for illness directly resulting from your employment. If you’re self- employed, you may not even have this cover.

“I can’t afford it”
Income Protection premiums are tax deductible.

What is Income Protection Cover?
Income Protection Cover pays up to 75% of your income if you are ill or injured. This money can help you and your family manage your living expenses while you recover.

What do the payments protect?
A monthly benefit could help you stay on top of debts, pay for medical bills and generally give you the means to maintain a reasonable standard of living if you’re not able to earn an income.

• Mortgage repayments
Whatever happens, there will be funds available to safeguard the family home.

• Day-to-day expenses
Everyday bills can really add up. Without the ability to earn, this money can help cover living expenses like food, utility payments, clothing and schooling.

• School fees
With continued income, you can continue to afford to send your children to the school of your choice.

• Additional care
Disabilities often incur the need for additional care or help around the house. Ongoing income can help to cover this.

• Rehabilitation
Rehabilitation is often required to support your transition back to work. Ongoing income will help you to afford this.

• Retirement savings
You can select options that will cover up to 85% of your income to help maintain your retirement savings.

AIHW (2008) Australia’s health 2008, Cat. no. AUS 99, Canberra
ii AIHW (2008) Cancer in Australia: an overview 2008, Cancer series no. 46, Cat. no. CAN 42, Canberra
iii ABS (2007) Australian Social Trends 2007, Cat. no. 4102.0, Canberra,
iv Fabrizio, E (2007) Australia & NZ Disability Income Experience www.actuaries.org/IAAHS/Colloquia/Cape_Town/Walker_-_Income_protection.pdf
v AIHW (2008) Cancer in Australia: an overview 2008, Cancer series no. 46, Cat. no. CAN 42, Canberra