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Income Protection Insurance


Income Protection Insurance

What is Income Protection Insurance?

Income Protection Insurance (IPI) is an insurance policy, available principally in Australia, Ireland, New Zealand, South Africa, and the United Kingdom, paying benefits to policyholders who are incapacitated and hence unable to work due to illness or accident. IPI policies were formerly called Permanent Health Insurance (PHI).

What does income protection insurance cover you for?

Income Protection cover is available for up to 75% of your income to provide an affordable level of financial protection in the event of sickness or injury, and to provide an incentive for the recipient to return to work. This often allows you to pay for expenses and focus on returning to work.

What is an income protection?

Income Protection Insurance (IPI) is an insurance policy, available principally in Australia, Ireland, New Zealand, South Africa, and the United Kingdom, paying benefits to policyholders who are incapacitated and hence unable to work due to illness or accident.

How much does it cost for income protection?

Find out how much income protection costs (per month) in Australia.

Monthly income Monthly cost for male Proportion of income
$2,000 $36.97 1.85%
$4,000 $61.91 1.55%
$6,000 $86.66 1.44%
$8,000 $111.53 1.39%

Do I need to have income protection?

According to the ABI, one million workers a year find themselves unable to work due to a serious illness or injury. It doesn't matter whether or not you have children or other dependants – if illness would mean you couldn't pay the bills, you should consider income protection insurance.

How long can you be on income protection?

You also choose the maximum amount of time you would receive monthly payments - either 1 or 2 years. As long as you pay premiums and continue working, the cover is in generally in place until you're aged 65. Refer to question 9. “How long does Income Protection last for” for further details.

Is income protection a taxable benefit?

Income protection insurance. You can claim the cost of premiums you pay for insurance against the loss of your income. You must include any payment you receive under such a policy on your tax return

What is income protection insurance UK?

Formerly known as permanent health insurance (PHI), long-term income protection (IP) is an insurance policy that pays out if you're unable to work because of injury or illness. IP usually pays out until retirement, death or your return to work, although Short Term IP (Stip) policies are also available at a lower cost.

What is short term income protection?

Short term protection covers your monthly income should you suffer an accident, sickness or unemployment. Designed to cover your core monthly financial commitments such as your mortgage/rent, bills and food.

What is redundancy insurance cover?

Unemployment insurance, also known as redundancy insurance, is a short-term income protection policy providing cover for up to 12 months should you be unable to work due to involuntary redundancy. It can be used to protect things such as your income, mortgage payments or loan and credit card repayments.

Can I claim income protection insurance on my tax return?

The ATO allows you to claim the costs of your income protection premiums for policies taken out separate to your Superannuation. So, if you have income protection as part of your super package, the premium is not tax deductible. If your insurance is a policy outside of your Super, the costs ARE deductible.

What are the different types of income protection?

There are three types of income protection

Income Protection

The best type of income protection policy is called….eh…income protection.
This pays you up to 75% of your income until you can back to working your own job.

Mortgage Income Protection

This is a streamlined version of the individual plan. It’s linked to your monthly repayments that you would still have to meet, even if you were out of work. It pays your mortgage so you can focus on getting better without worrying about losing your home.
The final type of income protection is wage protector.

Wage Protector

Before we look at wage protector, you should read through the factors that affect the price of income protection.
Your occupation is the main reason you pay more or less than your friend who has the same cover but a different job.

Insurers class your occupation according to their claims statistics. The higher the risk of a claims in your occupation, the higher your premium. The lowest risk are class 1 (desk jobs) while the highest risk are class 4 (manual workers)

Wage protector is a cheaper form of income protection that caters for class 3 and 4 occupations.

i.e where normal income protection premiums might be through the roof.