Losing your job or being made redundant can be a stressful time. Not only can it affect your career, but it can affect your health and personal relationships
You would have spent that sum for things like regular living expenses, holidays, and hobbies. Furthermore, a substantial part of your lifetime income would also help you accumulate wealth and maintain a certain standard of living in terms of buying a house, a car, and saving for retirement. However, even if you are temporarily unable to work due to being injured or an illness, that could have an adverse effect on your future plans.
In case you cannot work, you can try to replace your regular income through various other sources:
The above may assist with your regular living expense for a while, but you may end up in a situation where you have to pay back a large loan and incur incessant medical expenses, that may not be covered by Medicare and your savings.
Income protection insurance typically pays 75% of your regular income when you would not be able to work due to sickness or injury. Sometimes these are called Salary Continuance insurance if paid from your superannuation fund (additional restrictions apply).
Policy options include the selection of a waiting period. This is how long you must be out of work before the payments start, which could be only two weeks or three months. Furthermore, you have a choice of benefit periods – how long the income protection payments will be made assuming you still can’t work due to the illness. This could be only for a few years, or until you turn 65.
While the majority of these income protection policies would require you to be unable to perform your own job, other policies may provide rehabilitation benefits to assist your recovering and getting you back to work.
Income protection insurance premiums are often tax-deductible, and the income received is taxable.
If you want to stop worrying about what to do in a situation where you are no longer able to work due to injury or prolonged illness, contact your financial adviser regarding enrolling in an income protection insurance policy that would suit your individual financial needs.