Loss of income is probably the thing most people fear especially in those countries where the cost of living is very high. Australia is one such country, where the cost of living is significantly higher than other countries and where inflation is a serious threat.
Luckily, for permanent Australian residents and citizens, insurers offer a beneficial insurance plan where they can get monthly compensation payments if and when the policy holders are unable to earn a steady income due to problems such as an illness or injury.
The policy holders can enjoy a maximum of 75% of their annual pre-tax income towards monthly payouts provided they meet a few default eligible criteria set by insurers. Although these eligibility criteria vary from insurer to insurer and also depend on the type of contract and level of income protection insurance cover; in a nutshell these criteria are mentioned below.
Compensation payouts
Income covers offer maximum compensation payouts to those people who invest in a premium plan. Premium plans generally offer an indemnity contract along with maximum perks such as but not limited to a day one claim benefit and a death benefit. Some of the additional perks that may be offered either for free or for a nominal cost include accommodation benefit, rehabilitation expenses benefit and transplant surgery benefits.
Tax benefits
Tax benefits are offered only to those people who opt for standalone plans or income covers purchased under their superannuation funds. Income covers offered under superannuation funds offer may additional benefits along with a shorter waiting period and longer benefit period; however have many claim related criteria that have to be met in order to get the compensation payouts.
Claims
Claims are accepted quickly by insurers provided the claimant provides all the required documents with the claim. Some of the documents that are required include a health certificate or doctor’s note, proof of income in the case of agreed value contracts and a completed claim application form. The complete list of documents required by each insurer will be provided by the selected insurer when the policy holder needs to file a claim. This list of required documents can also be viewed online by visiting the website of the selected insurer.
Policies
Some policies are occupation only policies; which means that they are applicable for certain professionals only. An example of such a policy is an income cover for medical professionals; which offers financial protection in case the policy holder is infected with a blood Bourne disease at work due to direct contact with the patient or his blood.
Loss of income is covered
Loss of income is covered when the policy holder is unable to work for a few weeks, months or years or while the benefit period is active provided he meets all the eligibility criteria mentioned above and is affected with a health condition that does not allow him to work. The health conditions most commonly covered by income insurance plans include non-critical illnesses and injuries.
Compensation payments
Although income insurers try their level best to pay compensation payments to policy holders in a maximum number of scenarios; certain types of situations are not covered by income insurance plans. For instance, if a policy holder is fired from his job due to ethical reasons or criminal reasons, is let go due to financial constraints of the company then he will be ineligible to file a claim.
Income covers are beneficial for those people who want to protect themselves financially while they are still employed.
Total and permanent disability insurance plans are beneficial for those people who want to protect themselves financially if they are permanently disabled, lose the use of limbs, or lose their limbs all together. Unlike income insurance plans, TPD plans provide a one-time lump sum payment for ether an agreed or variable amount when the policy holder files a claim.
Term life insurance plans are beneficial to those people who want to protect their family when they are no longer there to fend for their loved ones.
Funeral insurance plans are beneficial for those policy holders who understand how expensive funeral costs can be and want to ensure that their families do not have to worry about money while saying good bye to the deceased policy holder. Terminal illness or critical illness plans are beneficial to those people who want to ensure that the insured person gets a lump sum compensation payment upon diagnosis or upon successful treatment of a serious illness such as cancer. The one-time payment received from the insurer for this type of insurance plan can be used to keep the policy holder comfortable during his or her last few months or can be used to pay outstanding bills, repay loans and other financial commitments.
- As a general rule, once the policy holder’s claim is accepted and the payment has been given by the insurer, the policy holder has the right to decide where to put the money. This means that he the policy holder receives $5000 every month from the income insurer; he can use the payout to pay bills, repay loans, pay for school fees or simply maintain his lifestyle. The insurer usually does not set any restrictions on the use of the money.
- Failure to disclose important information related to the policy will result in rejected claims. At times, the insurer may decide to stop giving the said benefits to the policy holder especially if information has been held back more than once. These terms are mentioned in the legal document sent to policy holders when they select a policy. As a general rule it should be noted that failure to disclose information you are aware of in relation to your health, your habits or your activities that can affect the policy in any way will result in claim related problems and possibly a lapsed policy.