Income protection thoughts?

[jacked]

Have spent the last couple of weeks reviewing my IP with CBA which I have had for four years, have cancelled this policy today because I can get a very similar product though TAL for much cheaper.. (compared PDS thoroughly) But my thought has now shifted to not worrying about it because...

-Have TPD/Death cover though super which my employer pays for with a lump sum payout which would cover me fine. (can increase later when needed)
-have a extended sick leave program at my company which allows me 15months sick leave
-WORK COVER for work related injuries, (first 13weeks 95% of wage, after that 80%)
-TAC for any road accidents payout for up to 5 years...

I know a few people on this forum know information about IP, Can be extremely important to investor's family's ect, I personally believe the only time I would need it if I was so sick to not return to work after 15months but not permanently disabled... which I can not really think of a situation like that or would be vary rare,

Sorry in advance for the long post, but would like to hear feedback, on whether is worth keeping given the above scenario... CHEERS!

 

[macca446]

Have spent the last couple of weeks reviewing my IP with CBA which I have had for four years, have cancelled this policy today because I can get a very similar product though TAL for much cheaper.. (compared PDS thoroughly) But my thought has now shifted to not worrying about it because...

-Have TPD/Death cover though super which my employer pays for with a lump sum payout which would cover me fine. (can increase later when needed)
-have a extended sick leave program at my company which allows me 15months sick leave
-WORK COVER for work related injuries, (first 13weeks 95% of wage, after that 80%)
-TAC for any road accidents payout for up to 5 years...

I know a few people on this forum know information about IP, Can be extremely important to investor's family's ect, I personally believe the only time I would need it if I was so sick to not return to work after 15months but not permanently disabled... which I can not really think of a situation like that or would be vary rare,

Sorry in advance for the long post, but would like to hear feedback, on whether is worth keeping given the above scenario... CHEERS!

Hi,
Well I thought a bit like yourself I have had always been employed full time but I got injured at work needed surgery and to cut a long story short it has been 3 years since then I got terminated and only now am I capable of working casual hours in a job I hate,Work cover only covers you now for a max 12 months then all medical and weekly entitlements cease,think very hard on what can happen and not just the cost of the cover.
Macca446

 

[jacked]

Macca446 thanks for your feedback and sorry to hear... your making my brain think really hard all over again... so confused whether to get it again with the company that's much more cost effective (TAL) and still covers quite well... grr...

 

[Scott No Mates]

I recently took my policy out in one of the super funds - sure I don't get the tax deduction but at least it is more cost effective than I would otherwise have received.

 

[jacked]

Yes that's true, just make sure you will be able to access cash in a event of a claim I hear sometimes money goes to super then its up to them to give it to your or something along those lines...

This income protection is really stressing me out trying to decide whether to keep it or not with my above situation...

 

[macca446]

i guess the only positive about my situation is since interest rates are low and over the years I have been able to have a good cash buffer to work with I am able to manage my portfolio, but my poor wife is working harder than ever before we have cover but a bit to late for me .
Cheers.

 

[jacked]

so I guess in your opinion, my current cover would not be the safest option, possibly getting income protection again with a waiting period of 12months could be a better option...

 

[macca446]

so I guess in your opinion, my current cover would not be the safest option, possibly getting income protection again with a waiting period of 12months could be a better option...

Yes I think at if at least you are injured at work that this type of cover would be beneficial after the 12 months of ceasing of work cover payments etc but find what product bests suits your circumstances , but my honest opinion speaking for myself income protection is something I should of done in which my partner aways hassled me about I should of listened lol.

 

[Peter_Tersteeg]

I recently took my policy out in one of the super funds - sure I don't get the tax deduction but at least it is more cost effective than I would otherwise have received.

By taking income protection through your super, the likely outcome is that you'll only be able to access the money for 2 years. If you can't work for more than that you'll be in trouble.


@jacked: Colonial insurance policies are assessed at the time of application. TAL is assessed at the time you make the claim. One of the big cost savings for TAL is that they don't need to spend money on every customer, only those who make a claim.

The downside of this is if there was something about you that is outside of TALs risk profile and this contributes to the claim, they won't pay. A cheap policy is worthless if the insurance company won't pay when you need it.

 

[Scott No Mates]

By taking income protection through your super, the likely outcome is that you'll only be able to access the money for 2 years. If you can't work for more than that you'll be in trouble.

(Ticked the until 65 yrs old option)

The downside of this is if there was something about you that is outside of TALs risk profile and this contributes to the claim, they won't pay. A cheap policy is worthless if the insurance company won't pay when you need it.

I had a client recently who contracted a serious debilitating illness - he won't work again. He too, has a policy for life but it has taken 2 years for the insurance company to approve his claim.

 

[jacked]

Thanks for your input pt bear as always , but TAL is also done upfront when you join them like CBA so a payout I believe is 100% the application with a TAL is not done at the point of a claim from what I have been shown. TAL Policy has minimal death cover and no mortgage insurance like I had with CBA but that does not cover much anyways and I already have death cover though super so I though of If keep IP switch to TAL and save quite abit of money...

Just trying to decide weather it is nescesary for my situation...

 

[allsuccess]

I have income protection via super. 75% of the pay till 65 years. I have double checked with them on this as well.

 

[Peter_Tersteeg]

I stand corrected jacked. I'm thinking of ALI. TAL is a very different proposition and they do perform upfront assessment.

Income protection via super may pay until age 65, but it's up to your super fund to determine if the funds will be released.

 

[jacked]

That's ok all good pt bear, given I have death/tpd, work cover/TAC, and have a long period of 15months sick leave do you think IP is really needed in your opinion or is this an expense I could get rid of??

 

[neK]

By taking income protection through your super, the likely outcome is that you'll only be able to access the money for 2 years. If you can't work for more than that you'll be in trouble.

Almost all of the super funds have income protection that have a benefit period to age 65 these days. Its been the case for the last 6 years. Those who have had it for a while may have benefit periods for 2 years, but can change it to 65.

 

[Sean M]

Hi Jacked,

I deal with this day in and day out. CBA has a strong reputation when it comes to their claims. It is important to remember that you get what you pay for. This being said I deal with both CBA and TAL. It really depends on your situation and what time of cover you are after and if you have any pre-existing conditions.

This is important because you have had your CBA IP policy for 4 years so if something has happened since then it is most likely that TAL will not cover you i.e. a serious health condition which they can exclude you on. I would also hesitate to cancel any current policies unless and until you have the new policy in place.

They are both good companies who do look to protect their customers. Without seeing the policies you are looking to compare I cannot say anything.

Those who are looking to get insurance via super as PT mentioned you also need to meet a condition of release. I.e. your playing in the super rules.

If anyone wants expert advice in this area because there are so many things to consider and most people don't have that time to read though the hundreds of PDS's feel free to give me a call and we can have a chat about this. So you can get back to hunting for your investment properties.

Cheers

Sean

 

[DaveM]

Question for the brokers.. does having life/tpd/trauma/ip insurance affect servicing for loans, either positively or negatively? ie is it seen as a risk mitigator?

 

[Terry_w]

Question for the brokers.. does having life/tpd/trauma/ip insurance affect servicing for loans, either positively or negatively? ie is it seen as a risk mitigator?

Not really, but it can hurt in some cases - eg. ANZ ask for living expenses and separately for insurances paid.

 

[beachgurl]

On the subject of insurances through super, I still have premiums taken out of my super policy for death/TPD. Turns out this insurance policy is invalid as I'm not currently paying into it. Could be a trap for others not aware of this. They have no problem with continuing to take the fees out of my account tho.

 

[Corey Batt]

It won't assist in serviceability, however it can be use to mitigate over risks in an application in some cases. A recent loan I put through is a good example of this.

I had a couple wanting to purchase a PPOR, both incomes serviced the loan however if the husband were to go out of work, the wife couldn't service the debt by herself.

The husband also only had a relatively short recent work history, as he was off work for a number of years with cancer treatment. Generally lenders want to see a consistent tenure of employment.

They had paid a relatively hefty sum to get a full coverage policy which covered life/tpd/trauma etc. This information provided to the lender mitigated the risk of future ill health of the husband, as all debts could be cleared by any payout and and still provide significant funds.

So while it may not get you the extra borrowing capacity, it can be the reason a deal goes through in selected cases.