Sometimes it seems like there is insurance for everything. You need insurance for your car, insurance for your home, insurance for the contents inside your home, insurance for your health, and insurance when you travel. And it all costs money.
So, what about income protection insurance? What does it do, and is it really worth it? Should you get income protection insurance, or is it just another monthly bill that you really don’t need in your life?
What is income protection insurance?
First up, what exactly is it? Just as car insurance protects against bad things happening to your car, and home insurance protects against bad things happening to your house, income protection insurance protects against bad things happening to your income.
We’re not talking about protecting against pay cuts or getting fired – instead, income protection protects your income should you become sick or injured and you can no longer work.
Who relies on your income? Is it just you? Perhaps you are supporting your partner or your family? When you think about what your income pays for, you begin to realize just how important it is.
Your income probably helps to pay the rent or the mortgage, it perhaps pays the utility bills, the rates, the Strata, the internet and the phone bill. It probably covers the cost of buying food each week, the cost of going out, of clothes, of books, of gadgets, and anything else you buy.
What if your income were to stop coming in? If you have a partner, would you be able to live off just your partner’s income? Would you still be able to pay the mortgage and the bills? Would you still be able to put food on the table and buy all other necessities?
What income protection offers
Income protection insurance can provide a ‘substitute’ paycheck if your real paycheck is no longer coming in. If you become sick or injured and can no longer work, income protection benefits can offer a way to pay for the necessities that your regular paycheck used to cover.
When you take out income protection insurance, you can choose how soon after stopping work that your benefits will start (waiting period). You may also be able to choose how long benefits will be paid out (benefit period).
Those choices will depend on what the insurer offers and how much you are willing to pay for cover. You will usually pay higher premiums for a policy that has a shorter waiting period and a longer benefit period.
How to choose the right cover
In order to choose the right income protection insurance policy, you will need to compare all your options. Research all your options online and choose an insurer and a policy that offers you the cover you need, such as Suncorp income insurance.