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Income protection / Life insurance

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#16 Swarles Barkley

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Posted 03 February 2011 - 03:57 PM

I don't know much about income/life insurance, though I really should look into it (all I know is that we have a level of cover in our super), but our houseloan has a level of cover built into it too. Not sure if it is a standard thing, but if one of us was to be permanently injured or to pass away our house would be paid out.
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#17 Pete


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Posted 03 February 2011 - 04:06 PM

Both of us work for the federal Govt so Death & TPD insurance is covered in our super. I think Income Protection is an extra that we can arrange to come out as an extra in super - I haven't really looked into it too closely.

However in saying that, I used to work in Super Administration and members could arrange extra cover over and above of the automatic cover provided by the fund and the premiums could come out of their super account.

Whist working there and unknown to me the company had taken out Income Protection for all employees and I was involved in am accident and was off work for 7 months. I was paid 75% of my wage until I was working my full hours again. This was great as I was single, living out of home and had my own debt. Thankfully I still had money to pay rent.

I should look into Income Ptotection again but hopefully I will never need it .... But you never know what's going to happen, already used it once.

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#18 Lemon



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Posted 03 February 2011 - 04:58 PM

We will definitely be looking into getting Income Protection Insurance this year, probably not life insurance as both of our super's cover that and permanent illness/complete disability.

I always thought it was a waste of money but when I got injured at work 6 months ago and didn't have it I defintely regretted it! We are just managing on DH's wage and don't want to go on government benefits unless it is absolutely impossible to avoid and I think we'll be ok, so long as I recover from my injury in the next 6 months. it is definitly not something I ever want to go through again though.

I will definitely have it in the future (once I am back on a wage so we can afford premiums) because this experience was very much out of the blue so I'll not take things like that for granted so much in the future. It's taught me a few lessons at least so theres a silver lining and I'll be paying a lot more attention to financial planning etc now.

I do think it needs to be an affordable premium though, it seems like a definite luxury to me simply because the the big expense, and I'll shop around for a good price first. I think it is definitely important if you have a mortgage. We are renting and if we had a mortgage now it would be my entire wage each month, so we would be crazy not to protect my income with insurance for that reason, but as we're renting now it's not too bad....I am definitely regretting not having it and it is stressful, but if we had a mortgage things would be a lot harder.

#19 Primm



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Posted 05 February 2011 - 02:54 PM

Something to thing about if the income protection insurance is a bit too expensive is whether you need to replace all his income. You said hubby was a high income earner, could you get by on 1/2 of his salary (or even less) while he was off work if it saved you a fortune in premiums?

#20 Lollies


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Posted 05 February 2011 - 04:05 PM

We have life insurance both for my husband & I even though I am a SAHM, we figure if I passed away at least he could pay off the house and afford to take time off or reduce his hours.

My policy is around $31 p/m with $430,000 payout. (MLC)

My husbands policy is around $53 p/m with $830,000 payout. (MLC)

Income protection is $75 p/m with a $4,000 p/m for only 2 years payout. (ING)

Do I think it's worth it? Mmm, well I guess it'll be worth it if we ever need it.

I have to say, it does give me comfort knowing that my husband won't have any debt hanging over his head if anything happened to me. I think he would feel the same way too. As for income protection, I wish we could get it to be paid till age 65 instead of 2 years only, but it was just too expensive, I guess that's the risk, insurance is a bit of a gamble.

QUOTE(Primm @ Feb 5 2011, 03:54 PM) View Post
Something to thing about if the income protection insurance is a bit too expensive is whether you need to replace all his income. You said hubby was a high income earner, could you get by on 1/2 of his salary (or even less) while he was off work if it saved you a fortune in premiums?

That's a good point, our income protection payout doesn't seem like enough, but our expenses wouldn't be as much if he couldn't work. Eg. He wouldn't have to fill up his car with fuel 2-3 times a week. We probably wouldn't need his vehicle so we could sell his and not have that repayment/rego/insurance. Those things could add up to $300 less per week we would be spending.

QUOTE(purpledixie @ Jan 31 2011, 11:02 AM) View Post

I have heard that income protection insurance is tax deductable, not sure if that is true though or if it applies to all policies??

Yes, you're right, income protection is tax deductable, I think if it is labeled as 'Income protection' then it is fine to claim, they send out a breakdown at the end of financial year the same as a group certificate so you can put it in with your tax.
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#21 Jane Doe

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Posted 05 February 2011 - 04:23 PM

There have been lots of informative posts in here, so thank you smile.gif

I must admit, it all gets a bit much for me to get my head around, so I might end up giving a couple of places a call and going from there.

It's one of those things you'll hope you never need, but in the event that something does happen, would be well worth the monthly outlay.

Thanks again ladies.
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#22 karry327


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Posted 05 February 2011 - 04:29 PM

I'm an insurance broker so just had to reply to some of the misconceptions.

Generally speaking, this is how the insurances work:

Life Insurance - pays out a lump sum in the event of death.

Total & Permanent Disability (TPD) - this is paid out in the event 2 independent doctors confirm you can never work EVER again. Usually you need to be off work for 6 months before making a claim and as you can imagine, you have to be in a pretty bad way mentally or physically to have 2 Doctors state with assurity you couldn't work ever again.

Trauma Insurance - pays out a lump sum in the event you suffer one of the trauma conditions outlined in your policy. Majority of claims are paid out for cancer, heart attack and stroke but you're generally covered for about 35 - 40 different types of traumatic conditions.

Income Protection - covers you for a maximum of 75% of your gross salary and is paid if you cannot work due to any illness or injury. You are paid a monthly benefit and as an example if your gross salary is $50,000, your monthly benefit would be $3,125 ($50,000 x 75% / 12). There is a waiting period - usually 30, 60 or 90 days and this is the period of time you have to be off work before being able to claim. You are only paid for the time you are off work AFTER your waiting period. There is also a benefit period, usually 2 years or 'to age 65' and this is the length of time you'll be paid if you can never return to work. This insurance is tax deductible to you at your marginal tax rate.

Life, TPD & Income Protection can all be through Super. Until a few years ago if you had income protection through super, it could only have a maximum benefit period of 2 years. Now you can have it to age 65. If you already have income protection cover through your super, it will most likely only still have a 2 year benefit period as the super companies would need to adjust their trust deeds to allow for longer which most haven't done yet.

QUOTE(scasey77 @ Jan 31 2011, 11:25 PM) View Post

As far as I know superannuation funds would not be able to pay out on income protection policies as I don't see how you meet a condition of release through loss of income. Although one of the conditions is "financial hardship" but I believe that is very hard to get. They can pay out on life insurance and TPD. Anyway, just thought I would mention it and I am by no means an expert - just know the rules from a taxation point of view.

The trust deed has to allow for partial disablement. As long as the trust deed states this, there is no issue in receiving the income protection benefit.

QUOTE(Tigridia @ Feb 3 2011, 04:10 PM) View Post

Just a note on the IP through Super (I"m talking about government super here) I have been unable to work for 3 years and was employed through the Government. I have now been declared totally and permanently disabled and get an invalidity pension through my super. However, it took until mid last year for this to come through after a long process of assessments and applications. I am still going through the case to get the funds for the 2 odd years I was off work with no income. So while there is protection there it isn't quick or easy to access.

Government super likes to do things a bit differently to the rest of the industry and generally speaking the TPD benefit is paid as an income instead of a full lump sum. As it is paid as an income it is generally thought to be an income protection policy but you'll most likely find it's a TPD policy. If it's like any of the ones I've looked into, it will pay you a monthly income and finish up with a smallish lump sum after a period of time. If yours was a true income protection policy, you would have been paid after serving either a 30 or 90 day waiting period. Of course, I don't know your situation or policy but this is my experience.

Anyway, that's my 2 cents. Hopefully it helps. And I'm in the same boat as everyone else. Hate paying for all my insurances however I'd rather have the safety net.

Best thing to do is to sit down and work out if something happened to you or your partner (be it death or injury) what would happen, how would you get by financially? Personally I think insuring your life is a lot more important than insuring your car, contents and so on (of course, they're important to but you know what I mean).

#23 Lollies


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Posted 05 February 2011 - 04:30 PM

Also try iselect, that's how we organised our Income protection after cancelling a way more expensive policy organised by a financial adviser. It at least gives you an easy way to compare some of whats out there.
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