By Bella Nguyen. Follow Bella on twitter.
Having an illness or getting injured is not something we like to think about, however, the harsh reality is that it can happen to anyone.
If you couldn’t work due to a serious illness or injury, how would you and your family manage? You might want to consider protecting your ability to earn an income. Here is a checklist of what to consider when looking at protecting your income.
1. What is income protection insurance?
Income protection insurance usually covers up to 75% of your income of your gross wages for a maximum time period if you’re unable to work due to illness or injury. You’d receive monthly benefits over a specified period, to replace a proportion of the taxable income you’d usually earn.
2. What are the benefits?
The payments provide essential financial support at a time when you are unable to earn an income. If you have dependants or a partner that relies on your income, this insurance could be vital to maintaining the family lifestyle and paying unexpected medical bills.
3. What is it going to cost me?
Your insurance premium is going to vary according to a number of different factors: your age, smoking status, gender, occupation, salary, medical history and policy preferences.
4. Is this a tax deductible expense?
Yes, you can claim the cost of premiums as a tax deduction, however benefits are treated as assessable income and are taxed accordingly. You must include any payment you receive under such a policy on your tax return.
5. Which policy is right for me?
Everyone has different financial needs, and to find the best wealth protection solution, you may need professional financial advice. Talk to one of our friendly Yellow Brick Road advisors on 1800 927 927 and explore which option is best for you and your family.
Did you know?
14% of serious claims in the workplace were from falls on the same level and 5% of serious claims in the workplace were from mental stress.
Source: Australian Workers’ Compensation Statistics, 2012–13, Safe Work Australia.