Why you need Income Protection

Matt Ireland, Evolution Financial Planning team


Obtaining Income Protection is one of the most important financial considerations you will make. Many will never actually realise the benefits of holding an income protection policy as they will remain healthy throughout their working lives. However, speak to anyone who has relied upon this cover and the message will be the same. Income Protection should be first and foremost on any financial checklist.

We insure our cars so that we can drive to work and we insure our tools so that we can perform once there, but so few of us insure the actual source of income generation that matters the most. Ourselves.

Income protection policies generally insure you for up to 75% of your normal employment income. This means that if you become sick or injured and unable to work for an extended period, you will continue to receive 75% of your income each month until the policy expires or you return to work.

What features make a good income protection policy?

The two most important features of any Income Protection policy are:

·         Waiting period: This is the length of time you are required to wait before making a claim on your cover. This period usually begins from the day that a medical practitioner certifies that you are unable to work so it is important to see a doctor immediately if you think you will need to claim. Longer waiting periods usually reduce the cost of your insurance premiums as you are more likely to become well again before going on claim.


·         Benefit period: This is the length of time that your claim will continue to be paid while you are unable to work. Upon reaching the end of your benefit period, your payments will stop and your cover may cease. The best policies have benefit periods to age 65 or 70 as these will continue to cover you until you would normally have retired.

Each individual insurer will also have a lengthy list of terms and conditions that can include other additional benefits or exclusions. It is important to review the Product Disclose Statement thoroughly to ensure that the cover is right for you.

If you would like some assistance with your insurance needs please contact Evolution for an obligation free consultation.

Jane Hextell