Income Protection Insurance Redundancy Australia – Know Your Options
When you are unable to work for one reason or another, this could seriously compromise your financial stability and the wellbeing of your family.
Income protection insurance provides a monthly benefit in case you become ill or injured and cannot work for a given period.
This benefit is meant to replace your income until you return to work and can be up to 75 percent of your gross salary. However, one of the greatest concerns for most insurance buyers is whether income protection insurance provides protection against redundancy.
Typically, income protection insurance policies in Australia do not cover redundancy. This means that you will not receive a monthly payout should you become redundant. However, there are certain redundancy benefits that some insurance providers attach to their income protection policies. When you have an income protection insurance redundancy cover, your mortgage repayments are made on your behalf for a given period. In addition, your insurer may also waive your premium payments for a certain period. These benefits are meant to provide some financial relief as you seek new employment.
Insurance buyers should note that redundancy benefits do not cover acts of voluntary redundancy. If you quit your job or are fired for any other reason apart from redundancy, you will not be eligible for redundancy benefits. Although you can obtain redundancy insurance as a standalone policy in some cases, most insurers provide this benefit as part of income protection insurance. You should also be careful when looking for redundancy cover online. In most cases, if you read about income protection that covers against redundancy, it is probably for people working overseas, not residents of Australia.
Some mortgage protection policies also cover against losing your job through redundancy. In addition, some income protection policies offer redundancy cover if you also have a mortgage with that particular provider. Although a typical income protection policy will not cover you against job loss, it is still important to consider what would happen if you became ill unexpectedly and could not work for a number of months or years.
The amount of savings you have should be considered when taking out your income protection insurance. For instance, if you have sufficient savings that you can rely on for a number of months in case you lose your salary, you can select a longer waiting period, effectively lowering the cost of insurance. In addition, income protection premiums are usually tax deductible, so you can also cut down the cost of insurance by claiming for tax deductions when filing your tax returns. Read: Mortgage Basic Knowledge That You Should Know
It is important to note that different insurance policies will provide cover for different situations. As such, you need to be careful when selecting the most appropriate income protection policy. Some insurers do not provide any benefits if you become involuntarily unemployed or redundant. Comparing different insurance products based on what they cover and how much the cover costs is critical when you need to find the best rates. Speaking to an insurance expert or your financial planner is highly recommended before taking out income protection insurance redundancy Australia.