Hi,
I'm considering income insurance to complement getting into IP. Seems to be a good idea to mitigate risk. I've just realised my Super gives me income protection based on:
- 75% income
- wait time only 2 weeks (i.e. from application to obtaining)
- for up to 2 years (after this they assume you would then be in a disability situation)
- doesn't cater for retrenchment
This would be all one would expect in an income insurance arrangement no? Do those of you would take up income insurance specifically to cover risk with your IPs do you obtain anything more than this?
Hi mixedup,
Income protection insurance is designed to replace 75% of your income in the event of an accident or illness. BUT it is not that simple and you should get advice.
What is the actual income they will cover? ie earned income before tax less expences?
The waitng period would mean you need to cover your expences for 14 days and then your benefits commence, but are not back dated to the start of your accident/illness.
The amount of benefit you get may be offset against workers comp or investment income.
How will you cover your expences if your illness is longer than 2 years?
You may think your total & permanent benefit lump sum within your Super will kick in. This will depend on the definition of disablement in the Super policy and is likely a VERY hard definition to meet especially if you are a young person.
Other things to check are, the definition of disablement for sickness and accident cover and are there any pastime exclusion ie scuba diving and so on.
Are there any health exclusions?
The list goes on and I tried to cover the main ones for you. Get advice, do some research and compare.
Cheers
Swany
Income protection insurance only covers loss of wages – investment income is unaffected (you can't get income protection insurance to cover your IP income). IPI is a tax deduction (if you are working).
A two week waiting period? Gee, that must be costing an arm and a leg – most are around 1-3 months wait (ie you should be able to support yourself & IPs for at least a few months before having to call in the insurance (this reduces the cost dramatically) – hopefully workers comp will cover much of the other period if it is work related.
Some policies do cover you until age 60+
Super policies generally have a life/tpd policy attached (mandatory component), some employers have added IPI as a benefit to their employees (this is rare unless you are a senior manager or have had it packaged).
Something else you would need to consider/review is your health insurance (if injury is not workers comp)
Swany wrote:Get adviceActual – who would you recommend to get advice on this front? i.e. would financial advisors cover this area? if you get advice from other insurance companies I'd be concerned they'd be biased
Scott No Mates wrote:A two week waiting period?Actually I didn't write this one down after my call to my Super scheme – perhaps it was 2 months – will have to double check.
Try your Super fund first to double check exactly what you have.The cover in the super fund will be underwritten by an insurance company. They could be you first option as they should understand your existing cover and what extra you may need.
Some financial planners also sell insurance and msut take into consideration your circumstances including existing cover before a recommendation.
Always get the advice in writing.
You need to seek professional advice from a licensed financial planner as there is more to consider than just income insurance.
I cannot specify the other forms of personal financial insurance you may need as this would be considered as giving financial advice.re "licensed financial planner" – probably a dumb question, however how can I get a list of licensed financial planners in Brisbane? Who are they licensed with?
ThanksContact the Finacial Planning Association in your state for a list.
NAB has licensed financial planners that usually sell all types of life insurance, income protection insurance ect.
they will be biased but that doesn't mean it will be a bad deal.
they might be quite competative. worth comparing not only their price but also their opinions.
frosty
do you know if they charge for an initial consultation? Or how engaging them works? Like I guess you need to decide what deliverable you want out of them in terms of a plan or document….
the other concept I was thinking of was developing my own plan but then getting it validated by a financial advisor – hopefully this would be cheaper too than paying $800-$1000 to someone to develop an overall plan…comments?
initial consultation is usually free.
good to get a rough plan in your head first and see what they think .
then go to several others and compare their ideas.
costs nothing to do this, only your own time.
it may give you some ideas to help you make your own mind up.
frosty.
mixedup
Personally i would never use a Bank for Financial planning advice as most of them are limited to who they can use.
Remember NAB own MLC so guess who your insurance policy will be coming from.Shoot me an email and on a Non advice basis i can give you some figures on Income Protection, Life and Trauma.
This would be on the basis that i have not considered your specific needs and merely provided you with a quote on information provided.
Sorry need to be careful as my Statement of Advice would be limited.
If you need to know my Dealer Principal is Professional Investment Services the Country's largest FP Group.
Richard Taylor | Australia's leading private lender
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