Regardless of how much income you receive, most people live pay check to pay check with income committed to loan repayments
as well as general living costs. So imagine how much turmoil your world would be in if you were suddenly unable to work –
through redundancy, illness, injury or being fired.
And this is why income protection insurance is so important.
In fact I think it is one of THE most important forms of insurance – although often overlooked by many people –
as it allows you to maintain an income to maintain your day to day life.
Sure, you may get a redundancy package,
sick leave and even WorkCover for workplace injuries – but what if you get injured during your local footy game and
can’t work for 6 months? WorkCover won’t cover it and odds are you don’t have 6 months sick leave accrued!
So income protection insurance (also referred to as salary continuance insurance) is intended for these situations
– ie where all other means of financing your time off work have been exhausted.
Typically, income protection
insurance will pay your ‘salary’ for a determined period of time – typically 12 months. So it’s NOT
a cash-cow for life if you get the sack! It’s intended to give you time to recuperate from injury, or find a new job
if you’ve been fired, or make alternative arrangements (eg disability pension) if you have been permanently disabled
from an injury and are unable to work again.
Some pointers for you to consider:
- Be honest in making an
application: Like all insurance policies, if you are dishonest or fraudulent in making your application, any claims you make
in the future can be rejected, effectively leaving you with no cover. Even if you think something in your ‘history’
may increase your insurance premiums, this is better than not getting cover at all!
- Be honest in making claims: You
can’t make a claim for salary continuance if your employer is paying you with sick leave entitlements! So don’t