Understanding the Australian Market For Income Protection Insurance

Income Protection Insurance For Loss Of Job

Income protection insurance is designed to provide a monthly stream of income if the policy holder suffers an injury or illness.

The benefit payout is normally 75 percent of the policy holder’s salary.

There are certain policies where the policy holder can take out more cover under a superannuation fund. In comparison to their UK and U.S.A counterparts, Australian insurers do not offer insurance for loss of job. General insurance providers may offer redundant workers some benefits such as premium waivers.

However, applicants should be clear about these exclusions in the Australian market when taking out an income protection cover.

Redundancy policy features

Despite the fact that Austrian insurers do not offer policies in the event of job loss, there are various policies that offer some sort of relief to persons who have been involuntarily unemployed.

Involuntary unemployment waiver

Premiums that are paid on the income protection cover will be waived during the period that the policy holder is unemployed. This option has a time limit, usually lasting several months. The insured is also expected to provide proof that he or she is searching for employment. There are various other instances when premiums may be waived if a person is involuntarily unemployed. The most common exemptions are: maternity and paternity leave, sabbatical and if you have to take a leave to provide care to someone dependent on you.

Unemployment benefit

Under this feature, the provider will make mortgage payments that are due but again, this is only for a set period of time. Another condition is that the mortgage loan must have been taken out with that same provider. Click here for more info.

Does income protection still make sense without a redundancy cover?

There are those who may argue that it does not make sense to take out an  insurance cover without the redundancy element. However, what most workers need to realize is that their ability to work and fend for their family is one of their biggest assets and it needs to be protected. This cover offers you a monthly stream of income when you are incapacitated from work as a result of an injury or illness. This means that you can concentrate on getting better instead of worrying about bills and the well-being of your family.

Factors to consider when applying for a cover

The Australian insurance market has received several new entrants over the past years. This has increased competition in this sector, much to the benefit of policy holders. The cost of cover differs from one provider to another. However, you should not solely focus on the cost; compare the features and go for a cover that offers you maximum benefits for your contribution.

It is also important to check the maximum coverage; most allow up to 75 percent of your income. Another important factor is the benefit period, which differs again depending on the insurer. Different insurers will also have varying waiting periods and it best to compare them and go for the shortest. If you do your homework well, you should be in a position to get an insurance product that will suit you.