INCOME PROTECTION
Strategy 1
Income Protection Insurance provides you with a regular income if you are unable to work due to illness or injury.
It can cover up to 75% of your gross income and payments can continue until you return to work, or until the end of the benefit period (whichever comes first).
The benefit period is the maximum length of time you can receive payments. Benefit periods typically range from 2 years to age 65.
Premiums are generally tax deductible when the policy is held in your own name.
HOW MUCH WILL YOU EARN BY AGE 65?
| Annual Income | Age 25 | Age 35 | Age 45 | Age 55 |
|---|---|---|---|---|
| $40,000 | $1,600,000 | $1,200,000 | $800,000 | $400,000 |
| $60,000 | $2,400,000 | $1,800,000 | $1,200,000 | $600,000 |
| $80,000 | $3,200,000 | $2,400,000 | $1,600,000 | $800,000 |
| $100,000 | $4,000,000 | $3,000,000 | $2,000,000 | $1,000,000 |
Based on annual income remaining constant to age 65
Tips and traps
- •Check the definition of disability - some policies only pay if you cannot perform ANY job, not just your own occupation.
- •Consider the waiting period - the longer you can wait before benefits start, the lower your premium.
- •Review your policy regularly to ensure your cover keeps pace with your income.
- •Understand any exclusions that may apply to your policy.
- •Compare policies from different insurers - premiums and benefits can vary significantly.
- •Seek professional advice to ensure you have the right level and type of cover.