Importance of Income Protection Cover   Back

Income Protection Insurance is designed to guard one of your most important financial assets: your salary. As the name suggests, it is availed to protect your cash inflow in case of any sickness, injury or any other reason where you are unable to work. So it is important to manage the cash flows as there might be a temporary unexpected break from income but not from the bills! Stress and anxiety of financial crunches is the last thing you need to worry when you are unwell. This cover works as a safety net for you and your family and help you focus only on better health.

Income Protection covers up to 75% (excluding super) of your regularly earned salary or income. You can avail that benefit after completing your waiting period which usually is from 2 weeks to 2 years. The longer the waiting period, lower the premium. The benefit can be availed till the continuance of your benefit period which usually is from 1 year till age 65. The longer the benefit period the higher is the premium.

Different platforms provide different levels of Income protection covers, such as Standard cover, Premium cover, Income protection plus cover to name a few. The higher the feature, more the severities are included and higher is the premium. One can structure their IP cover either through Super, Super-link or through Non- Super.

Premiums are generally tax deductible to both the client and Trustee of the super fund. The benefit is received by the client at the time of filing income tax return when he pays the premium through non super and in the form of rebate at the time of paying the premium through super. 

The advantage of taking it through super is the low premium cost, thereby not affecting the personal cash flow. Taking the cover from Non-super can result in increased premium cost, but you’ll have policies with more comprehensive coverage, including ancillary benefits such trauma, rehabilitation expenses, relocation benefits and care costs etc.

So making the right choice depends on your requirement and you can always review your policy on the policy anniversary and get the cover revised as per your current scenario.