Income protection – not to be taken for granted

We take some of the best things in life for granted. The ability to earn an income can be one of them.

It’s just work, right? So how would you feel if it was lost or taken away? Most people wouldn’t drive without car insurance, or live in a house without home and contents insurance. Yet most Australians don’t consider protecting their ability to earn the income that funds their lives and those of their families.


  • 1 in 3 Australians have a chance of being diagnosed with cancer before age 75.
  • 531,800 Australians were injured at work in 2013 – 2014, with 39% not receiving any financial assistance.
  • More than 60% of Australians will be disabled for more than one month during their working life.
  • More than 25% of Australians will be disabled for more than three months during their working life.

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It’s not just working. It’s life.

If you can’t work and earn an income because you’re sick or injured, mounting debts can cause stress that makes recovery even more difficult. How long could you afford to cover your expenses without draining your savings?

If you’re like most Australians, not long at all. That’s where income protection cover can help, providing a replacement income to help you and your family meet the cost of living if this happens to you. Despite the risks – and the facts – many Australians don’t have income protection cover. Often due to some common misconceptions.

“I’ll be covered under Workers Compensation”. Workers compensation is limited. It only applies if you are injured during working hours or for illness directly resulting from your employment. If you’re self- employed, you may not even have this cover.
“I can’t afford it”. Income protection premiums are tax deductible and can cost less than $4 per day.

Just some of the features your income protection cover offers include:

  • Tax deductible premiums. Your premiums are generally tax deductible, which means value, and affordable cover.
  • Partial payments. If you can return to part-time work, you can receive a partial monthly payment to support your transition back to full-time employment.
  • Additional benefits. A range of additional benefits let you tailor the cover to suit your needs. Income protection cover can be tailored to suit a variety of different needs, depending on your time of life, expenses and income. Your options include:
  • ‘Agreed value’ or ‘Indemnity’. ‘Agreed value’ cover will pay the predetermined sum insured, no matter what your income is at the time of the claim. ‘Indemnity’ cover will pay whatever is the lesser amount of your sum insured and your income at the time of claim.
  • A choice of waiting periods. If you need to claim, you can choose how long you will wait before you receive benefit payments. The waiting period you choose will affect your premium amount.
  • Benefit periods. You choose the benefit payment period: for one, two or five years; or until you turn 65 or 70.
  • A range of extra options. The retirement protection option, for example, will cover your superannuation contributions if you make a claim.
  • Inside or outside super. You may be able to hold your income protection cover inside super and pay premiums using pre-tax dollars. Rules and restrictions apply, however, so it’s important you talk to your financial adviser about what’s best for you.
  • Choice of premium options. ‘Stepped’ premiums increase each year in line with your age. ‘Level’ premiums remain constant until you’re 65 or 70, depending on which ‘level’ premium option you have selected, at which point they convert to ‘Stepped’.

Yes, you really do need Income Protection Insurance.

A monthly Income Protection Benefit could help you stay on top of debts, pay for medical bills and generally help you maintain a reasonable lifestyle – even if you can’t earn an income. It can help cover:

  • Mortgage Repayments. Whatever happens, there will be funds available to safeguard the family home.
  • Day-to-day expenses. Everyday bills can add up – fast, especially when there’s little or no income coming in.
  • Regular payments can help cover living expenses like food, utility payments, clothing and schooling.
  • School fees. Having continued income means your children can continue to go to the school that you choose – and they love.
  • Additional care. Injury and illness often mean the need for additional care or help around the house. Ongoing income can help to cover this.
  • Rehabilitation. Transitioning back to work and life can require rehabilitation. Ongoing income will help you to afford this – and get you back sooner.
  • Retirement savings. You can select options that will cover up to 85% of your income to help maintain your retirement savings.

Why Income Protection? Because your insurance needs change as your circumstances change. To get the best value for money you should reassess your insurance if you decide to buy a house, get married, start a family or start a business.

For your peace of mind contact a Bentleys Wealth Advisor to discuss all your insurance needs.

Some of these services must be performed by an Australian Financial Services Licence holder or through an authorised representative. Your closest office can direct you to the correct advisor.

The information provided by Bentleys does not constitute financial product advice and is for general information only. It is written without taking into account any individuals personal objectives, situation or needs, and is not intended as professional advice. Any person acting upon such information without receiving specific advice does so entirely at their own risk. Please contact your Accountant to discuss your personal situation before relying on this information.



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