Income protection or disability income plan is the provision of a monthly or fortnightly
payment to the insured person to replace income lost as a result of an injury or
illness and its affect on the ability to work. Depending on the structure of the
policy and the extent of the disability the insurance may pay for a week, year or
lifetime. Income protection allows a person’s lifestyle to continue if their ability
to work is impaired. Investment income is not included, only income from the insured
persons’ ‘personal exertion’
An insured person must be in employment to purchase this style of policy, either
self employed or an employee, but must be full time or at least 25 hours per week.
A person performing full time home duties is unable to purchase this type of policy.
Ages 16 to 60 are the usual candidates with policies generally renewable to age
65.
Applicants can insure up 75% of their earned income over the last 12 months, which
is depends on whether the insured is:
- PAYG. Total employment package including pre tax remuneration,
fringe benefits,salary,superannuation and other fees; and
- Self Employed. Average monthly income due to personal exertion,
less the related share of necessary business expenses.
Statistics on Income Protection
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Facts about Income Protection
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Number of people of working age who will suffer an accident or illness that will
keep them of work for more than 3 months
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1 in 3
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Number of people who are disabled for 3 months who are still disabled
at 6 months
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50%
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