On average, only 25% of debilitating injuries occur at work or are work-related.
In 2018-19 there were 115,707 compensation claims made for serious work-related injuries in Australia.
The average time it took for a worker to return to work due to a serious injury was over six weeks.
In 2018-19 the median compensation payout for a serious claim was just $14,500.
Income Protection – Who Needs It?
Income protection is particularly valuable for employed & self-employed people, casual workers or anyone else who relies on their income to fund the basics. You will be required to provide evidence of your usual income when taking out a policy.
Some people may not need cover. For instance, if you
- are near retirement and would give up work if you were unable to perform your duties;
- have plenty of sick, annual leave and long service leave to use;
- have access to adequate amounts of cash to rely on;
- have other people who will support you.
But for the most part, people really underestimate what they truly need in a time like this.
A common cause of confusion is to think you are covered by worker’s compensation insurance.
This, however, only covers accidents at or during work, or illness directly attributed to work. And from the statistics above, the payments received may not be anywhere near enough to cover costs.
What does Income Protection Cover?
Income protection insurance pays an income to you if you are unable to work due to an accident or illness. The income is usually 70% of your pre-disablement income and is payable after a “waiting period”. You choose the waiting period to suit your needs – for instance, if you have unused leave, you could choose a longer waiting period which will help to reduce your premiums over the life of the policy.
The income will be paid until you recover and return to work or for a “benefit period” – this can be as short as one year or up to age 65. In addition, some policies pay a rehabilitation benefit to help ease you back to work.
How are Premiums Calculated?
Premiums are generally based on your age, gender, occupation and previous medical conditions so it is critical to find the right insurer that works for you. There is no point in having insurance that doesn’t pay out when you need it.
Income protection insurance premiums are tax deductible. Many people pay the premiums annually near the end of the financial year to bring forward the tax deduction. This also means that if you are on claim the income payments are taxable to you as your regular income would be.
At Cambio Group we have a stellar claims history for our clients, largely by using quality insurers and making sure that the application process is detailed and accurate.
While we always hope for the best and maintain a positive outlook, there are many things in life we cannot control. So, we should be prepared for the worst-case scenarios in life.
Income protection may seem like a large expense now but it can be a life-saver when you need to rely on it.
Unsure if you need income protection? Speak with a financial advisor on the Gold Coast today for all your financial planning needs!
Contact Cambio Group and make sure that you maximise your financial capabilities for a better future.
Disclaimer: The information (including taxation) in this website does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on the information provided without first obtaining professional advice specific to your circumstances.
REFERENCE
Australian Bureau of Statistics: “Work Related Injuries, Australia, 2017-18” www.abs.gov.au
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For over 20 years we’ve been helping people like you make smart, informed business and financial decisions. We’re in this to make a difference, to help you avoid the common mistakes that prevent people from building a business and creating a life they truly love.
