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Income protection insurance

What is income protection

insurance?

For most people, their lifestyle is fully or partially dependant on their ability to work. Therefore an extended absence because of sickness or injury could be devastating to them and any dependants. Income protection insurance replaces your income up to the insured benefit amount of the policy if you are unable to work as a result of sickness or injury. The maximum cover is usually 75% of earnings; however, optional benefits may be available in addition for things such as superannuation contributions and also to protect you in case of a severe disability.

Benefit payment is usually excluded if you suffer a sickness or injury as a result of:

war or an act of war •

a self-inflicted act •

an uncomplicated pregnancy. •

However, policies can differ and you need to have your financial adviser check the specific conditions that apply to any contract you are considering. It is also important to remember that benefit payments usually do not start immediately and an excess or waiting period can apply during which no benefit is payable. The waiting period can be as short as 14 days or as long as two years. Work with your adviser and choose one that suits your needs and your budget.

What are the chances of being prevented from working as a result of a sickness or injury? More than 60% of Australians will be disabled for more than 1 month during their working life. More than 15% will be disabled for more than 3 months during their working life.

Source: Institute of Actuaries Table IAD 1989-93 and ALT 90-92

Linda and John’s story

Linda and John worked hard to build their nest egg and have always made regular super and mortgage contributions. But to maintain the lifestyle they are used to living, they need to maintain their current income levels.

When John developed cardiovascular disease his only worries were related to his recovery as Linda had wisely incorporated income protection and trauma insurance in their plan.

(2)

Income protection insurance

What is income protection

insurance?

For most people, their lifestyle is fully or partially dependant on their ability to work. Therefore an extended absence because of sickness or injury could be devastating to them and any dependants. Income protection insurance replaces your income up to the insured benefit amount of the policy if you are unable to work as a result of sickness or injury. The maximum cover is usually 75% of earnings; however, optional benefits may be available in addition for things such as superannuation contributions and also to protect you in case of a severe disability.

Benefit payment is usually excluded if you suffer a sickness or injury as a result of:

war or an act of war •

a self-inflicted act •

an uncomplicated pregnancy. •

However, policies can differ and you need to have your financial adviser check the specific conditions that apply to any contract you are considering. It is also important to remember that benefit payments usually do not start immediately and an excess or waiting period can apply during which no benefit is payable. The waiting period can be as short as 14 days or as long as two years. Work with your adviser and choose one that suits your needs and your budget.

What are the chances of being prevented from working as a result of a sickness or injury? More than 60% of Australians will be disabled for more than 1 month during their working life. More than 15% will be disabled for more than 3 months during their working life.

Source: Institute of Actuaries Table IAD 1989-93 and ALT 90-92

Linda and John’s story

Linda and John worked hard to build their nest egg and have always made regular super and mortgage contributions. But to maintain the lifestyle they are used to living, they need to maintain their current income levels.

When John developed cardiovascular disease his only worries were related to his recovery as Linda had wisely incorporated income protection and trauma insurance in their plan.

(3)

Income protection insurance

What is income protection

insurance?

For most people, their lifestyle is fully or partially dependant on their ability to work. Therefore an extended absence because of sickness or injury could be devastating to them and any dependants. Income protection insurance replaces your income up to the insured benefit amount of the policy if you are unable to work as a result of sickness or injury. The maximum cover is usually 75% of earnings; however, optional benefits may be available in addition for things such as superannuation contributions and also to protect you in case of a severe disability.

Benefit payment is usually excluded if you suffer a sickness or injury as a result of:

war or an act of war •

a self-inflicted act •

an uncomplicated pregnancy. •

However, policies can differ and you need to have your financial adviser check the specific conditions that apply to any contract you are considering. It is also important to remember that benefit payments usually do not start immediately and an excess or waiting period can apply during which no benefit is payable. The waiting period can be as short as 14 days or as long as two years. Work with your adviser and choose one that suits your needs and your budget.

What are the chances of being prevented from working as a result of a sickness or injury? More than 60% of Australians will be disabled for more than 1 month during their working life. More than 15% will be disabled for more than 3 months during their working life.

Source: Institute of Actuaries Table IAD 1989-93 and ALT 90-92

Linda and John’s story

Linda and John worked hard to build their nest egg and have always made regular super and mortgage contributions. But to maintain the lifestyle they are used to living, they need to maintain their current income levels.

When John developed cardiovascular disease his only worries were related to his recovery as Linda had wisely incorporated income protection and trauma insurance in their plan.

(4)

My Name Financial

Income protection insurance

What is income protection

insurance?

For most people, their lifestyle is fully or partially dependant on their ability to work. Therefore an extended absence because of sickness or injury could be devastating to them and any dependants. Income protection insurance replaces your income up to the insured benefit amount of the policy if you are unable to work as a result of sickness or injury. The maximum cover is usually 75% of earnings; however, optional benefits may be available in addition for things such as superannuation contributions and also to protect you in case of a severe disability.

Benefit payment is usually excluded if you suffer a sickness or injury as a result of:

war or an act of war •

a self-inflicted act •

an uncomplicated pregnancy. •

However, policies can differ and you need to have your financial adviser check the specific conditions that apply to any contract you are considering. It is also important to remember that benefit payments usually do not start immediately and an excess or waiting period can apply during which no benefit is payable. The waiting period can be as short as 14 days or as long as two years. Work with your adviser and choose one that suits your needs and your budget.

What are the chances of being prevented from working as a result of a sickness or injury? More than 60% of Australians will be disabled for more than 1 month during their working life. More than 15% will be disabled for more than 3 months during their working life.

Source: Institute of Actuaries Table IAD 1989-93 and ALT 90-92

Linda and John’s story

Linda and John worked hard to build their nest egg and have always made regular super and mortgage contributions. But to maintain the lifestyle they are used to living, they need to maintain their current income levels.

When John developed cardiovascular disease his only worries were related to his recovery as Linda had wisely incorporated income protection and trauma insurance in their plan.

They received a lump sum payment that helped with John’s recovery and also received an ongoing income of 75% of his pre-disability weekly earnings, plus ongoing superannuation contributions. Their cover helped them maintain their current lifestyle while easing the burden of John’s medical expenses.

(5)

JV logo space

Income protection insurance

What is income protection

insurance?

For most people, their lifestyle is fully or partially dependant on their ability to work. Therefore an extended absence because of sickness or injury could be devastating to them and any dependants. Income protection insurance replaces your income up to the insured benefit amount of the policy if you are unable to work as a result of sickness or injury. The maximum cover is usually 75% of earnings; however, optional benefits may be available in addition for things such as superannuation contributions and also to protect you in case of a severe disability.

Benefit payment is usually excluded if you suffer a sickness or injury as a result of:

war or an act of war •

a self-inflicted act •

an uncomplicated pregnancy. •

However, policies can differ and you need to have your financial adviser check the specific conditions that apply to any contract you are considering. It is also important to remember that benefit payments usually do not start immediately and an excess or waiting period can apply during which no benefit is payable. The waiting period can be as short as 14 days or as long as two years. Work with your adviser and choose one that suits your needs and your budget.

What are the chances of being prevented from working as a result of a sickness or injury? More than 60% of Australians will be disabled for more than 1 month during their working life. More than 15% will be disabled for more than 3 months during their working life.

Source: Institute of Actuaries Table IAD 1989-93 and ALT 90-92

Linda and John’s story

Linda and John worked hard to build their nest egg and have always made regular super and mortgage contributions. But to maintain the lifestyle they are used to living, they need to maintain their current income levels.

When John developed cardiovascular disease his only worries were related to his recovery as Linda had wisely incorporated income protection and trauma insurance in their plan.

(6)

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. RI Advice Group Pty Ltd strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances including a personal financial advice from a licensed financial adviser.

RI Advice Group Pty Ltd | ABN 23 001 774 125 AFSL 238429

Where does income

protection insurance fit into a

comprehensive financial plan?

Trauma insuranceprovides a lump sum payment if you suffer one of a list of major medical trauma. This will assist you to obtain the best medical and rehabilitation care, and also change your lifestyle if you wish.

Term insurance provides a lump sum payment if

you die which will enable your family and/or business to be in a similar financial position after your death as that which applied beforehand.

Business expense insurance reimburses you as the owner of a small, self-employed business for ongoing, fixed business expenses that continue while you are unable to work because of a sickness or injury.

Total and Permanent Disability (TPD) insurance provides a lump sum payment if you suffer a sickness or injury and are permanently unable to work. This will help you to pay the

additional expenses that arise as a result of a severe sickness or injury.

None of the components above cover off the specific purpose of income protection insurance.

What are the alternatives?

Is this insurance I have to have or are there some viable alternatives?

Family and friends?

Maybe family or friends would assist you but then again they have their own obligations and financial concerns. Also it is not easy to ask others for financial assistance in this way.

Savings?

If you have some money saved you may be able to use that in the short-term to support yourself and your family but problems arise if your savings are not readily accessible. Also what if your incapacity is longer term?

Employer?

You may be a valuable employee but your employer is unlikely to be able to continue paying you and also pay for finding, training and retaining a replacement for you.

Government benefits?

If your injury or sickness is work-related, workers’ compensation will help to a limited extent; however, the benefit level is likely to be insufficient and what if the sickness or injury is not work-related?

Social security?

Social security may be available but the eligibility criteria are means tested. Also, once again, the benefit levels are unlikely to be sufficient.

Getting advice

Income protection insurance policies are very complex products and definitions can vary widely between companies - for example some policies state that if you can still perform any part of your job you may be not covered. Your adviser can help you to unravel the ‘fine print’ and show you how to compare products from different companies.

For peace of mind, whatever the

future may bring, speak to your

financial adviser today. Contact

<office> on <phone> for further

information.

Term insurance Income protection insurance Business expenses insurance TPD insurance Trauma insurance

References

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