Reasons to purchase income protection

6 Reasons to purchase income protection insurance plans

  • Unlike other insurance plans, income covers offer a range of benefits to the policy holder while he is alive and need help. Income covers not only offer maximum financial protection to the policy holder but also to his immediate family. People who purchase these plans do not have to worry about situations where they cannot earn money to support their families. These plans ensure that Australians can live without facing financial problems when they are forced to take leave from work. These plans can offer a maximum of 75% of the policy holder’s annual yearly income towards timely compensation payouts. The payouts given by the insurer can be used to repay loans, mortgages, pay monthly bills, pay household bills, pay school fees, maintain your lifestyle and do much more.
  • Advanced benefits that self-employed individuals, white collar employees and blue collar employees can expect include rehabilitation expenses benefit, accommodation benefit, death benefit, day one claim benefit and transplant surgery benefit. The day one claim benefit is generally offered for a small fee but has many important benefits such as ensuring that the policy holder can file a claim during the waiting period. Self-employed professionals may be offered an extra perk by a few selected insurers; this perk allows the policy holder to work for a maximum of 10 hours from his home while getting payouts. The main purpose of this benefit is to help policy holders ensure that there are no upsets at work while he is on sick leave.
  • Income insurance plans are not nearly as expensive as they once were and these plans can be afforded by majority of the people in Australia. Permanent residents of Australia are eligible to purchase cheap plans or premium plans as per their needs.
  • People who work 30 or more hours every week can enjoy both basic and advanced benefits if they opt for the right plan. Self-employed individuals are also eligible to get a maximum of 75% of their annual income towards compensation payouts. Part time employees may also be eligible to enjoy a range of benefits.
  • Some insurers in Australia have begun offering income covers to home makers which means that your unemployed partner or spouse can be protected as well. Income covers for home makers ensure that the insured person can get enough rest while he or she is ill so that he or she can get back to normal quickly. These plans also offer compensation payments for injuries that may occur due to accidents. The compensation amount offered to home makers will depend on the insurer and the premiums the policy holder is ready to pay.
  • Income covers can make sure that your life is stress free since these plans will provide you and your family with payouts once your claim is approved. By purchasing a plan that suits your family’s need; you can support your family even while you are on sick leave.


3 Reasons to purchase agreed value contracts

  • To get maximum compensation payments that can range from 50%-75% of your annual income. Agreed value contracts generally pay more than cheaper contracts; however the final payout amount will depend on your salary, the cover limit selected by you and the insurer’s terms.
  • To enjoy tax benefits offered with standalone policies and with many superannuation income covers. These plans are tax deductible and buyers who opt for good contracts can enjoy one or more tax benefits.
  • To get an assured amount with every claim.  Agreed value contracts guarantee you will receive a pre-decided compensation payment once your claim is accepted.


Note about agreed value contracts

The buyer is required to submit proof of income while applying for the selected plan. The compensation amount given when a claim is accepted will be based on this proof of income which means that; if the policy holder is self-employed and earns a variable income then he can be sure that he will get an assured amount. This type of contract is beneficial to those people who are unsure how much they will earn every year and do not want to risk getting lower compensation payments in case the amount they earn reduces at the time the income protection claim is filed.


2 Reasons to purchase indemnity contracts

  • To get a reasonable compensation amount usually less than 50% of the policy holder’s annual income.
  • To spend lesser money on insurance while enjoying some of the perks provided. Indemnity contracts are easier on the pocket and are meant for those people who want to get insured but are on a strict budget.


Note about indemnity contracts

Income protection plans that offer an indemnity contract have many limitations hence they are offered for a lower rate as compared to premium plans with an agreed value contract. The amount the buyer earns at the time of filing the claim will be taken into consideration by the insurer to decide the total payout that will be given to the policy holder. Policy holders who decide to opt for this type of contract can submit the proof of income at the time of filing a claim. Once the claim is accepted the insurer will inform the policy holder about the compensation payments he will receive. Usually employees who want to opt for insurance within a budget are advised to opt for indemnity contracts. Indemnity contracts are not suitable for self-employed individuals.


2 Benefits of opting for good income protection contracts

  • To get a contract with a maximum payout and a short waiting period along with a long benefit period. A short waiting period implies that you get the payouts in as less as 2 weeks. A long benefit period implies that you can enjoy the given perks for as long as 5 years.
  • To get a contract that can be adjusted depending on your current circumstances and financial condition. Good contracts are flexible and policy holders are given the choice to adjust certain terms of the contract if they wish to do so.

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