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Top 10 Income Protection Questions

We have put together a blog of the most common questions we get on income protection.
Click on the question that is most relevant to you.

What does income protection cover?

How much of my income can I cover?

What do I need to know if I am self employed?

Under what circumstances could I claim?

How long does it take for me to start receiving my benefit?

Does income protection cover redundancy?

What is better income protection or TPD Insurance?

How do I make a claim?

How good are companies at paying claims?

Did you know income protection premiums were tax deductible?

What does Income Protection Cover?

Income Protection is an insurance cover type which covers your income if you are unable to work due to a sickness or accident. It pays a monthly benefit to you for the length of your benefit period. It allows you to keep paying monthly and day to day living expenses while you are off work.

How much of my income can I cover?

The income protection policies we compare allow you to cover up to 75% of your salary. Select insurers allow you to extend this to up to 85% which can help cover minimum mortgage repayments or superannuation contributions.

What do I need to know if I am self employed?

If you are self employed and are looking for income protection you should consider:

  • The waiting period options available
  • The benefit period options available
  • What proof of income you are required to provide

Under what circumstances could I claim?

You can generally claim on income protection if you are unable to work due to a sickness or accident. The sickness or accident does not have to be work related i.e it does not have to occur at work. It could be a serious illness such as cancer or it can be a serious injury such as a broken leg.

How long does it take for me to start receiving my benefit?

The amount of time it takes for you to receive your benefit will be dependent on your waiting period, which is the amount of time you need to be disabled before your benefit can start accruing. Waiting period options range from 14 days to 2 years.

Does income protection cover redundancy?

The policies we compare do not offer cover for redundancy. Select insurers may offer to cover your minimum mortgage repayments if your loan is taken out through a bank which is aligned with an insurance company. Other criteria will apply.

Which is better, total and permanent disability or income protection insurance?

Total and permanent disability (TPD) insurance and income protection insurance are two completely different types of cover. TPD provides a lump sum benefit if you become totally and permanently disabled and it’s unlikely you will ever be able to go back to work.

Income Protection policies provide a monthly benefit if you are unable to work due to a sickness or accident. It is specifically designed to protect your income and can be used in the event of more minor injuries and illnsess than TPD insurance.

How do I make a claim?

In order to make an income protection claim you will need to:

  • Contact xLife
  • Fill out a claim form
  • Submit a treating doctor’s report
  • Submit a PBS/Medicare report
  • Proof of income (dependent on type of income protection policy)
  • Provide additional financial information if self employed

At xLife we are claim specialists and can help you through the entire claims process.

How good are insurers at paying claims?

Insurers paid out over $1.1 billion in income protection claims in 2012 which shows how often income protection claims are paid. In 2010 the number was just over $1 billion, whch shows the payments are not only consistent but increasing.

Did you know Income Protection premiums were tax deductible?

As income protection premiums are income protection in nature, you can generally claim your income protection premiums as a tax deduction. The amount you can claim will be dependent on your marginal rate of tax.

About Russell Cain

Russell Cain(Can be on found on Google +) is the CEO of xLife Pty Ltd, an award winning life insurance comparison service which incorporates the Life Insurance Direct and xLife brands. He has over 10 years experience in the accounting and finance industry as well as over 15 years experience in running small business. It was in 2005 when running one of these small businesses that xLife first materialised as Russell realised the importance of sound financial advice, high level of customer service and the important of openness and transparency with customers. In his spare time, Russell is an avid property investor and home renovator, enjoys cycling and playing squash and also participates in an entrepreneurial mentoring program where he currently helps mentor small business owners to help achieve their goals.