how does income protection insurance work?

how does income protection insurance work?

say if someone has this insurance, if they lose their job, do they get a payment?
 
how does income protection insurance work?
say if someone has this insurance, if they lose their job, do they get a payment?

No, that is unemployment insurance.

Income protection insurance will pay up to 75% of your salary if you are unable to work because of sickness or accident. (Much like Workers Comp will pay your salary if you are hurt or injured while working, except this covers you if that happens while out of work hours).

They only pay 75% because the thinking is that the other 25% would be used as the cost of getting you to work, dry cleaning, lunches etc if you were working anyway.
 
as far as i know none of the companies in australia offer unemployment insurance

you can get insurance which will cover you if you cannot continue working due to health issues, and you can get insurance which will cover your credit cards and mortgages repayments in case you lose your job, but there is no insurance which would pay you benefits if you just lose your job. that's what centerlink is for
 
Some mortgage protection insurance policies have unemployment cover, but usually it is very limited in it's payout.
 
Sorry Strannik missed your post there.

Personally I have income protection. I don't have any insurance to cover my mortgage if I lose my job, but I have a reasonable sized buffer and liquid assets I could sell if need be (What I consider self insurance :)).
 
They only pay 75% because the thinking is that the other 25% would be used as the cost of getting you to work, dry cleaning, lunches etc if you were working anyway.

They only pay 75% as an incentive for people to get back to work. If they paid 100%, no one would ever "recover".
 
There are some that pay out for involuntary redundancy, but only for 3 or 4 months and it seems to add a lot to the cost of the policy to have this. MLC and Mac Bank Mortgage protection products both have payments for involuntary redundancy.
 
Hi Guys,
I looked at one 'Mortgage Protection' product that offered 4 month's payments for losing your job. I think it was for retrenchment or being sacked.
I remember that it was with NAB, but I don't remember the name of it.
It was expensive, but if you don't have the means to create a buffer for yourself I guess it's more expensive not to have it?
Anyway, let me know if you want the details and I'll look back through my files....
Cheers, Medine
 
Hmmm. I took out income insurance 2 months ago and they will pay out 100% of my income if I can't work. I'm self-employed though so maybe that's why.
 
Hmmm. I took out income insurance 2 months ago and they will pay out 100% of my income if I can't work. I'm self-employed though so maybe that's why.
I have looked into this over the years and unfortunately also have personal experience in this,
If you get income protection from getting hurt,say in a car accident.The company will pay you xx amount each week ,however the down side is they wont pay medical expenses :(

Workers comp now has a policy for self employed people.I chose this over the other company.

It just so happened I broke my elbow from a fall at work and
I was paid around 75% of my agreed income.(Agreed on when I signed with them)I had to prove that income before I could make a claim.
The good side is workers comp covers all medical expenses,including physio,which can mount up when you include operations,MRI's etc.
Another plus is W/C does not worry that you are earning oodles of money from your business or other business ventures while you are incapacitated.
With the other company's,if you earn a cent outside of what they are paying you,it will go against you. :mad:(I believe this includes rental income)


The down side with W/C is,it only covers you in your work hours,however for self employed like myself,I do quotes at all odd hours,and on all seven days :eek:

Read your fine print for medical costs and for other money's coming in?;)
 
I used a broker. Have 3 types of cover. Life, Income & some other one that covers medical bills. It costs $5K a year though. Ouch.
 
Income Protection Insurance is a big extra cost. Instead, Im just glad I have been with my current employer for many years and have 3 months long service up my sleeve + sick leave. I wont use it, I keep it for that specific purpose - just incase.
 
I have income cover & trauma insurance through Tower for about $61 per month ($732 per annum)....so it is reasonable. With tax deductions it works out to be about $450 per year.

The cover was $5k per month and trauma gives $50k payment if I get ill with one of the defined sicknesses. I chose a 90 day wait...as I have sick leave which will cover me for at least 3 months.

As I had a pre-existing condition it was a pain to get it through the Underwriters....but it eventually went through.
 
re: income protection

Hi all,

Couple of things income protection will give you. Peace of mind and money when you need it the most. It covers gives you certainty around the unknown.

While workers compensation covers injuries during work hours. There is no peace of mind that if something happens out of work hours and one is unable to work for a long time you will be financially sound.

One needs to have a good look at this risk.

Income protection is expensive, yes. However there are ways to reduce the premiums costs and still give you a affordable after tax cost.

For example, if you increase the waiting period you can greatly reduce the premiums.

In saying the above, it is of vital importance the company you choose has a good claims history. Some companies will have cheaper premiums but are very tight when it comes to claim time. This finer details are unknown to customers.

You can look around for a cover yourself, and tweak things to suit your needs or you can get a insurance specialist to look at it.

We do free reviews, quotes and research. Send me a quick email on jignesh@fmw.com.au if you would like some quotes done etc.

regards

Jignesh
02 8425 7802
 
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