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If you’re working and haven’t yet reached the point of financial independence then income protection insurance should be on your radar. As the name implies, it can help you protect your greatest asset – the ability to earn an income.
At the heart of all income protection policies is the promise to pay the policy owner a regular benefit, usually 75% of their normal income, if they are unable to work due to accident or illness. Payments are made after an agreed waiting period and continue until either the policy owner is able to return to work, or until the end of the agreed benefit period.
Core and supplementary benefits
In addition to the core provision to pay a replacement income, most income protection policies also offer a wide range of supplementary benefits. These vary from policy to policy, but may include:
Adding supplementary benefits adds to the cost of cover, and the value of any supplementary benefit depends very much on individual circumstances. Someone with a good income, modest expenses and a working partner may be able to easily meet costs such as childcare, even if their income drops to 75% of its usual amount. For someone on a tighter budget, supplementary benefits may be a way of achieving greater cover at a reasonable cost.
Supplementary benefits allow cover to be adjusted to suit individual needs. Take Kate. She’s a single, 29-year-old marketing manager who lives alone. Kate’s immediate family all live interstate and she regularly holidays overseas.
Not surprisingly, Kate sees no value in the childcare benefit. With no dependents she also doesn’t require death cover. However, with no close family living near her, the family support benefit and bed confinement benefit do appeal to her. Given her frequent overseas travel she also opts for the travel and accommodation benefit.
The ability to select only the relevant supplementary benefits means that Kate is able to design an income protection solution that suits both her needs and her budget.
Design your policy
Income protection insurance is one of the key foundation stones of an effective financial plan. If your income needs protecting, talk to your financial planner about designing the policy that best suits you.
Need some advice? Contact your Financial Adviser today for a review of your insurances to ensure you and your family is protected. We work with a group of highly regarded Insurance partners who will offer advice with your best interest at heart.
AGS Financial Group Pty Ltd, ABN 70 093 990 946, trading as AGS Financial Group, are authorised representatives of AMP Financial Planning Pty Limited ABN 89 051 208 327 (Australian Financial Services Licence No. 232706). Accounting, taxation, and business advisory services are provided by AGS Accounting Pty Ltd ABN 12 166 728 696. AGS Accounting Pty Ltd is a member of Chartered Accountants Australia & New Zealand. Liability limited by a scheme approved under Professional Standards Legislation. Any advice on this page is general in nature and does not take into account your personal objectives, financial situation or needs. Accordingly, you should consider the product disclosure statement for any product and your own objectives, financial situation and needs before acting on this information and before acquiring a financial product. You can obtain a copy by contacting us on 02 9966 8188.
Financial planning, corporate benefits and mortgage services are provided by AGS Financial Group Pty Ltd ABN 70 093 990 946, an Authorised Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 (AMPFP), AFS Licence No 232706. Accounting, taxation, and business advisory services are provided by AGS Accounting Pty Ltd ABN 12 166 728 696. AGS Accounting Pty Ltd is a member of Chartered Accountants Australia & New Zealand. Liability limited by a scheme approved under Professional Standards Legislation.