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Common income protection insurance myths
When it comes to income protection, the amount you choose to insure yourself for may be dependent on a number of factors, including whether you’re living in a dual-income household or whether you’re very happily single.
The problem to consider is how you would cope without your salary coming in if you were recovering and unable to do your job? Go one step further and the question is: who will pay your bills? Who will put a roof over your head?
What income protection options are available?
Without income protection or other protection offered via your life insurance policy, unless you have a large amount of savings, there are very few options if you find yourself unable to work.
Consider this: if you are part of a couple, would you survive on one income? If you’re single, would you need to sell your home or break your lease? Are you able to rely on family or friends to help if you’re unable to work due to illness or injury?
The ability to be independent and live the lifestyle you wish is very important. Which is why taking out income protection can be so important. It could help cover you for lost income, helping you maintain your obligations and lifestyle.
You may be feeling on top of your game today, but who knows what tomorrow will bring? A small investment may help protect you.
So what myths are there around income protection?
Myth one: Private health insurance is enough
Some people believe that private health insurance is all you need to ensure you get the assistance you require. While private health insurance will cover a portion of your medical bills, it does not help with your salary. It will help with covering treatment, medical bills and for some plans, pharmacy. Yes, this help goes a long way to ensuring you’ll have access to the medical assistance you need and hopefully, it will help get you back on your feet faster with rehabilitation and recovery efforts. But, your salary is still what’s missing.
Myth two: All you need is government assistance
Another common myth is that government assistance is all that’s needed to get through a tough time if you were ever unable to work due to illness or injury. While there are some government financial assistance services offering help to people who have developed a disability through injury or illness, it’s very rarely enough of an income stream to maintain your lifestyle and it very rarely will cover your entire salary, if ever. Income protection, however, covers a portion of your salary directly, on top of whatever government assistance you are eligible for.
On top of this, government assistance isn't always guaranteed, often with a lot of red tape to navigate. You may also only be eligible for a limited amount of funds, which doesn’t come close to the average Australian wage. With income protection though, you can receive up to 75% of your average income up to $10,000 a month, less business expenses, helping you keep on top of your bills so you can focus on your recovery.
Myth three: You don’t earn enough to justify income protection
The final myth that many people believe is that income protection insurance is only necessary for those in high-income brackets. But this couldn’t be further from the truth. No matter what life stage you’re at or how much you’re earning, income protection can be the financial safety net you need if you experience an accident or illness that forces you out of work.
If you’re questioning whether you should take out an income protection policy, income protection can help take away the stress of worrying about how you would cover your day to day expenses leaving you to focus on your recovery. Want to know more? Explore AAMI Income Protection Insurance online, or get in touch with one of AAMI Life’s friendly insurance specialists today on 13 22 44.
- What is Income Protection Insurance?
- What’s the difference between income protection through super and a standalone policy?
- What is indexation in insurance?
AAMI Life Insurance products, other than in some circumstances the Redundancy Benefit, is provided by TAL Life Limited ABN 70 050 109 450 AFSL 237848 (TAL Life) which is part of the TAL Dai-ichi Life Australia Pty Limited ABN 97 150 070 483 group of companies (TAL). TAL is not part of the Suncorp Group. TAL uses the AAMI brand under licence from the Suncorp Group. Any advice on this page in connection with the Life products is general in nature and is provided by Platform Ventures Pty Ltd ABN 35 626 745 177 AFS Representative Number 001266101 (PV). PV is part of the Suncorp Group and an authorised representative of TAL Direct Pty Limited ABN 39 084 666 017 AFSL 243260 (TAL Direct). General advice does not take into account your individual needs, objectives or financial situation. Before you decide to buy or to continue to hold a Life Products you must read the relevant Product Disclosure Statement. The Target Market Determination (TMD) for the product is available on our website.