Income protection insurance

Do you have income protection insurance?

  • Yes, benefit until age 60 (policy held in personal name)

    Votes: 68 36.8%
  • Yes, 2 year benefit (i.e. policy held in super fund)

    Votes: 27 14.6%
  • No

    Votes: 90 48.6%

  • Total voters
    185
Our of interest, how many people that have over $500k of debt have income protection insurance with a benefit period until age 60 (note that income protection insurance within super normally only has a 2 year benefit period).

I'm interested in the answer as, in my opinion, most people that have a large repayment commitment should have income protection insurance. That said, I suspect a lot of people don't think about it.
 
I'd like to have it, but apparently due to my weight I can't get it. Will be getting it for my hubby before we settle on our latest purchase though.
 
Did you use a specialist risk insurance advisor? Some of these guys have very strong relationships with underwriters. Often it's just a matter of cost - most insurers will do anything at the right price.
 
No I haven't actually. Do you know of any good ones? I'd at least like to find out how much it'd cost. The last guy I spoke to laughed and said "You'll never get insurance at that weight". Thankfully I've lost about 25kgs since then, but it's still a haunting thought to have that happen again (and I'm still quite overweight).
 
I have it until 60, but don't have $500k debt. I took it out when I had a mortgage and just kept the policy going. I ride a motorbike daily so just consider it a safety net if anything were to happen.
 
Our of interest, how many people that have over $500k of debt have income protection insurance with a benefit period until age 60 (note that income protection insurance within super normally only has a 2 year benefit period).

This is less relevant if the debt is hedged or matched by an asset. This applies to investment properties - most/part of the interest is covered by the rental income.
 
Mine is for a 5 year period and in my personal name (because its fully tax deductible). My life insurance policy is through my industry super.

Edit:I did get quotes to do it through my SMSF but since I did have some $ in an industry super I got the policy through them for a lot less
 
Last edited:
I'm interested in the answer as, in my opinion, most people that have a large repayment commitment should have income protection insurance. That said, I suspect a lot of people don't think about it.

I thought about it and decided against it when I found out that the "financial adviser" who was pushing for it was getting something like 50% of the insurance premium as a commission.

There are other ways to protect yourself, like looking for properties with a higher yield and having significant cash buffers.

Also, income protection insurance doesn't cover the risk of losing your job. That is a major risk not covered.
 
I was thinking of getting Income protection also.

I am only young (under 30), but have two dependants (under 3) and a wife which obviously rely on me financially. I have death and tpd insurance through my super already.

Looking forward to what others have to say in this thread.
 
I was thinking of getting Income protection also.

if you're in a low risk office job then it's not very expensive.
If you have an accident at work you'll be probably be covered by worker's comp.

If you have an accident at home or you got a serious ilness and can't work then that's where it would be beneficial.

If you have a lot of sick leave acummulated, you could use that until your income protection kicks in.

IP is not for everyone,
You've got to judge if this is something you need.
 
Last edited:
If you have a lot of sick leave acummulated, you could use that until your income protection kicks in.

I thought sick leave was not usually cumulative though. ie. you get your 10 days per annum and what you don't use you lose.
 
All the pints above are valid and interesting. The key thing to ask would be “if you were sick and couldn’t earn an income, how are you going to pay for commitments such as living expenses, mortgages, children’s education expenses and so on?” Rental and investment income might pay for some of this. Loan buffers, cash, liquid investments, sick leave, net worth and so on also mitigate this risk. However, there’s a possibility that you could fall ill and never be able to work again. However, you might not meet the definition of ‘permanently disabled’ so you might not be able to claim on TPD insurance. You might not want to sell investments because this will impact on your ability to afford retirement. Therefore, what are you going to do?

IP is one (often very good) solution. The key things to remember is a longer waiting period reduces cost (therefore, if you have heaps of sick leave and cash savings you might be comfortable with a 2 year waiting period for example). Also, you probably don’t need IP forever. There will (hopefully) be a time where you’ll have a strong asset base that will see you through this risk.

Some IP policies have the option of covering involuntary unemployment (losing your job).
 
Most Income protection policies I have explored have a 1 month wait before you get any funds and then it's only 70% of your stated wages.....
1 month sick and you get nothing....I gave it up a few years ago now...not worth it.

My wife on the other hand has 26 weeks sick leave built up.....:D
 
Most Income protection policies I have explored have a 1 month wait before you get any funds and then it's only 70% of your stated wages.....
1 month sick and you get nothing....I gave it up a few years ago now...not worth it.

My wife on the other hand has 26 weeks sick leave built up.....:D

I'm pretty sure that you can get a 14 day waiting period (min period). Most people would have enough sick/annual leave and cash to last at least 14 days. If not, IP insurance probably isn't your biggest problem.
 
Our of interest, how many people that have over $500k of debt have income protection insurance with a benefit period until age 60 (note that income protection insurance within super normally only has a 2 year benefit period).

I'm interested in the answer as, in my opinion, most people that have a large repayment commitment should have income protection insurance. That said, I suspect a lot of people don't think about it.

I hold a retail policy in my retail superfund, 30 day wait to age 65.
 
Also, i cant belive people are so negative toward Income protection.

If you crash your car you will have insurance, say your write off two cars,, about 60K.
You all pay insurance for your car right.

Now, who was driving that car??

If you were left a quad, or couldnt work again, thats 35 years of income paymenst for a 30 years old, or 1.5Million without indexation.

Theres some real smart people in here but i just cant get how if your debt heavy, you dont have it.
 
I found out that the "financial adviser" who was pushing for it was getting something like 50% of the insurance premium as a commission.
Highly unlikely. If he was only getting 50% up front commission it would mean he was rebating more than half of his commission. Standard is around 110%.

Not a good basis for deciding to take it on or not though IMO. You either need it or you don't.
 
Not a good basis for deciding to take it on or not though IMO. You either need it or you don't.

It is a good basis to understand why financial advisers are pushing for it so aggressively, typically using scare tactics. There is an obvious conflict of interest there that you need to aware of.

The "You need it" argument is an emotional decision. There are many risks in life you can't insure against. You just need to accept that risk is part of life. No need to feed financial advisers & an insurance industry to reduce only a small part of your risks.

If you spend your life trying to analyze all your risks, you would suffer from analysis paralysis.

The way is game is set up is that, once the financial advisor gets paid, the insurance covers its running costs and profits, there is not much left to pay back claims.

I much prefer to set myself up in a self-insured fashion, leaving plenty of cash buffers, knowing that I have covered ALL my risks in that way, not just a small part of them.
 
HouseKeeper,
I will admit some people can self insure, but alot cant,
Did you know that for every 1 house lost to fire, 10 will be lost due to death, and 20 lost due to prolonged illness/sickness
Now i respect the fact that you might be a millionaire, but alot of us arent and need to insure there income
 
Top