Is income protection insurance worth it?
Many people believe 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, 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, perhaps ask yourself this: how will you keep a roof over your head and pay the bills if you can’t work because of illness or injury? Income protection can safeguard your quality of life should an unexpected setback strike.
What is income protection insurance?
Designed to help you get back on your feet if you’re unable to work due to sickness or injury, income protection provides up to 75% of your average income of the previous 12 months, up to $10,000 a month to keep on top of bills and expenses. That way, you can focus on what you need - recovery and rehabilitation.
It’s up to you how you use your monthly benefits, whether that’s on rent or mortgage payments, bills and credit card repayments, childcare and school fees or even the basics like food, clothing and transport expenses. AAMI’s Income Protection includes cover for some pre-existing medical and mental health related conditions, subject to eligibility criteria, which can help provide even more peace of mind.
Importantly though, there are always some exclusions that may apply so it’s important to read your policy carefully.
Comparing the monthly costs
How do I plan for my future?
No one can predict the future. But you can plan for it, giving you some control over what’s ahead. Nobody wants to consider an accident or illness suddenly impacting their health. But it’s a very real possibility, no matter how young or old you are, or what pay bracket your income falls into.
The Australian Institute of Health and Welfare (AIHW) reports that on an average day, 100 Australians suffer from a stroke that could leave them permanently out of work. It also reports that accidental falls were the most common cause of injury deaths. Leading a healthy lifestyle and making smart choices is always a good way to live, but it doesn’t protect you from absolutely everything that may happen.
Do I earn enough to take out cover?
There are a lot of myths surrounding income protection. One of the biggest is that income protection is only worth it for those with a lot to lose financially. But here’s the thing, whatever your income is currently, that’s what is supporting your lifestyle. No matter how much you earn, if you lose it, how will you cover your expenses? Anyone who is part of the workforce will benefit from the protection and peace of mind provided by income protection insurance, no matter what you earn or what life stage you’re at.
Think of income protection as your own personal cavalry ready and waiting to come to your rescue should you need it. When making the decision, consider what you and your family would do if the money you earn wasn’t deposited into your account each pay cycle. A person’s working life is lengthy, especially with an ageing population. It would be rare that you could go through your entire working life without sickness or injury.
Is income protection right for me?
Regardless of your life stage, income protection can be beneficial. For the families, there is the consistent pressure of providing for children, whether that’s feeding and clothing them or paying for childcare. For those singles or couples without kids, there are still day-to-day expenses and financial commitments such as rent or mortgage repayments to consider. It makes even more sense for the self-employed or small-business owners, whose monthly income can often be inconsistent, to consider income protection.
An unexpected injury or illness may mean an extended leave from work and a change in your lifestyle. With income protection though, this risk may be mitigated, with the cover alleviating the stress of paying bills. Regardless of your life stage or how much you earn, everyone can benefit from taking out a policy that covers your income if you’re unable to work. At the end of the day, you need to focus on getting better, not stress about how you’re going to afford your lifestyle.
- 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.