A financial safety net
Life throws you challenges when you least expect it. While you may not know when adversity will hit, you can be prepared for the financial impact with the right insurance.
Life insurance is a way of managing that risk. It provides the money you need when things go wrong.
We understand that no one likes paying insurance premiums but there are strategies and options that can minimise the impact on your cash-flow. Don’t put off looking into income protection insurance as an unexpected gap in income can have a significant impact on you or your family’s lifestyle and future.
Types of life insurance cover
There are four types of cover which fall under the broad umbrella of life insurance. In this blog we’re focussing on income protection.
But before we do, here’s a brief overview of the other types of cover to consider.
Life cover – also known as ‘term life insurance’ or ‘death cover’, pays a set amount of money as a lump sum when you die. The money will go to the people you nominate as beneficiaries on your policy.
Total and permanent disability (TPD) cover – pays a lump sum to assist with rehabilitation and living costs if you are totally and permanently disabled as a result of an accident or illness. TPD is often bundled with life cover.
Trauma cover – pays a lump sum if you are diagnosed with a specified illness or injury. These policies include the major illnesses or injuries that will make a significant impact on your life, such as cancer or a stroke.
A serious injury or illness can stop you working for a certain amount of time.
But it doesn’t stop the bills coming in.
That’s when you need to find a way to support yourself and your family.
Income protection gives you a steady source of cash in such an eventuality.
It replaces the lost income so you can focus on getting better and not how you’re going to pay the bills.
It’s suitable for anyone from any occupation and is of particular importance for people who are self employed or small business owners.
How it works
Income protection policies will typically pay you 75 -80% of your income for a set time period which you can select (e.g. 2 years or to age 65). The premiums are tax deductible, which helps to reduce your tax, however you will also pay tax on any benefit you receive, just like your regular income.
You will also need to pick a waiting period when you select your level of cover. This is the period of time (often 30 to 90 days) that you must be ill or injured before you can make a claim.
Many income protection policies will also pay additional benefits to help with your recovery, even if you can still go to work.
Case Study: lump sum payment helps recovery
A serious cycling accident left one of our own advisers, Roel Burghouwt, with a fractured shoulder. He faced six weeks in a sling and months of physiotherapy while still needing to support his own young family.
That’s when Roel’s income protection insurance kicked-in. He knew he was eligible to claim a specified injury benefit payment due to the fracture, even though he was still able to work full time.
So Roel turned to our inhouse admin team for support and they helped process the claim so he could concentrate on his clients and his recovery.
Within a week of the paperwork being submitted he was paid a lump sum of two times the insured monthly amount.
Roel is still recuperating but the benefit payment means he can fully focus on his recovery and his family and not have to worry about money.
Do you need income protection?
Our financial advisers will work with you to determine if you need income protection and how much.
We will analyse your lifestyle and your circumstances, and recommend what types of life insurance you need, whether it be income protection, life cover, TPD or trauma.
If you’re no longer working it’s important to encourage your loved ones to take out proper cover, whether its your own partner or children, to protect their own families.
Your adviser can help determine the level of cover you would need by looking at your debt, living expenses, education fees, savings and investment goals.
Let the experts do the work
Your adviser will compare policies based on their definitions, benefits and the competitiveness of the premiums. If you might benefit from changing an existing policy to a different provider, we will make sure you are covered by your existing policy until your new policy is in place.
There are different ways to pay for insurance premiums to minimise the impact on your cash-flow. Your adviser will recommend options. Many super funds offer life insurance so speak to your adviser to find out if there is cover available through your super fund and if it’s appropriate for you.
When your income or circumstances change, we will review your policy with you so you continue to have the right type and level of cover.
Making a claim
If you need to make a claim on your income protection policy, you will have to provide evidence of your illness or injury.
Your adviser will help you to work out what’s required and manage your claim so that it gets processed as quickly as possible.
Are you certain your family would be financially stable if you or a loved one weren’t able to earn an income?
Speak to an adviser today to find out!