Hey guys,
I just had a strain in my back (herniated disk) and off work for a week.
Got me thinking what happens when run out of sick leave, think I need a safety net.
So looking into income insurance but not sure what to look for in?
For instance is income insurance same as life insurance?
Are there any key providers out there or all the same?
So anyone with experience let me know.
thanks
It's not enough to just say I've got it in super. Op should read the pds and understand when it will pay out and compare with other products. If you can't do this or understand the differences then they should get financial advice. The final decision made can mean the difference between a claim being paid or not being paid.
If you did decide to get it in addition to any automatic cover you have, you might have issues getting full cover - they like to exclude anything they possibly can or refuse cover outright. Since you have hurt your back, to get any further/additional cover, you probably would have to go through an insurance broker that specialises in getting insurance for people with previous injuries.
Should have got it before you hurt your back.
Before you buy insurance, you need to make sure your back is covered.
Now you have a pre-existing injury, and may find it difficult getting cover for that particular injury.
pre-existing injuries must be declared or they might knock you back
Income Protection insurance is different compared to life insurance. You can be covered up to 75% of your pre-tax salary.
Your herniated disc may cause an exclusion initially but if there are no ongoing symptoms, most insurers will remove the exclusion after a period of time. As everyone said, check your super. You may have default cover already but be careful, default cover by nature is basic cover and can have a lot more exclusions.
If you take Income Protection and pay for it from your own pocket, premiums are tax deductible but payments from the policy (if you need to claim) will be taxed.
Personal Insurance generally come under two types, those that pay a lump sum benefit and those that pay an ongoing (monthly) benefit.
Lump Sum Benefit
- Life Insurance
- Total Permanent Disability
- Trauma/Critical Illness
Monthly Benefits for the duration of the illness/injury or insured period, whichever is lesser
- Income Protection
- Business Expense Insurance
Things to consider:
- Insurances that provide a monthly benefit are tax deductible, and the income paid during claim time is declared on your tax return and is taxable as income normally is.
- A key to personal insurance is that is is age dependent, so the longer you defer it, the higher the starting premiums are.
- It is very important to consider levelled premiums over stepped premiums, although this means the initial starting premium is higher, the overall savings for the life of the policy is cheaper as it will not increase due to age factor. (Of course it would increase due to other factors such as inflation, insurers premium adjustments across ALL policies etc) But Age factor is always the killer, and the reason policy holders of stepped premiums are priced out of the market as they age and become a higher risk, the time they need their insurance most.
- Waiting period, monthly benefit policies have options for 14, 30, even 90 day waiting period, it makes your monthly benefit policy much more affordable, but also means that you are not able to claim for income during the waiting period, and no, it is not back paid. Waiting periods allow you coat effectively insure yourself for serious illness or injury and you will subsequently budget for things of a more minor concern.
- If you have pre-existing injuries or illnesses that you have not fully recovered from, then it is likely to be listed as an exclusion to the policy. No point attempting to lie to underwriting as they can access your medical records at time of claim, and it's best to know you are covered or not covered rather than have a decline at claim time.
- It is true that smokers pay a more expensive premium, but it's also something you should disclose on your application, otherwise again you will cause trouble for yourself at claim time.
- You have the option to have insurance pay super on top of your monthly benefit, this is an important consideration, as it continues to top up your super whilst you are on claim. Imagine an injury or illness that stops you from working and your benefits pay you up to the age of 65. At the age of 65 the monthly benefits stop but you never contributed to super for the duration of your disability.
- retail policies will always be superior to the group policies offered through super.
Insurance is Risk protection, the higher your risks are, the more expensive the premium is, because you are more likely to claim.
p.s. saw a topic I am a little passionate about and before I realised … I've typed too much .. haha ..
Got me thinking what happens when run out of sick leave, think I need a safety net.
So looking into income insurance but not sure what to look for in?
That's not how insurance works. You need to get the policy when you're healthy and then they cover you when you get sick. They won't cover you for a preexisting illness/injury.
Once you're better you can apply for insurance to help you the next time you get sick but there's not much you an do if you run out of sick leave with your current injury.
A pre-existing condition is not the end of the world. I was off work for a week with lower back pain in 2014. I disclosed my back issue and was approved for income protection insurance with an exclusion for any back related claims. The broker advised me the exclusion clause could be reviewed in 2 years time.
After 2 years, my broker rang me to remind me to challenge the exclusion. Since I had not had any issues for 2 years I agreed. They got the insurer to send me a declaration form in which I basically stated that I had had no recurrence of the issue for 2 years. They then removed the back exclusion from my policy.
First check your super, you might be already paying for income insurance without realizing it.