Essential Tips on Income Protection Insurance

As an adult who earns an income, income protection insurance is probably one of the best and the most important types of insurance you can take out. The reason for this is that you could receive up to 75% of your salary should you become unable to work due to an illness or injury. You could then use the payouts to pay for your monthly bills and expenses, such as your utilities, rent, and mortgage.

In this article, we will share with you a few essential things you need to know about income protection insurance. Using these tips, you would be able to get the best deal that you could get out of this type of insurance. Let's get started with...

  1. Indemnity vs. Agreed Value. When taking out income protection insurance, you will have an option between indemnity value and agreed value. Indemnity value is less expensive to take out, although the value of the payouts you receive will depend on your last few paychecks. Because of this, it is a safer option if you have a regular job and report to work diligently. Meanwhile, agreed value is better-suited for self-employed individuals because payouts are set according to your salary when you applied for the policy. This would help protect you from your fluctuations in your income and you will be assured of steady payments when you need them.
  2. Factors that will affect your premiums. The price of the premium you'll have to pay depends on a number of factors such as your age, gender, health, and occupation. As you get older, for example, the premiums tend to be more expensive, or the insurer would provide a less-comprehensive cover because you become more at risk to health problems. Your premiums will also be affected by the waiting period that you choose before you receive the payment. The quicker you get the payment, the more expensive the premium will be.
  3. Level vs. Stepped premiums. Speaking of premiums, you also have the choice between stepped and level premiums. The former is cheaper at the beginning, but the price increases over time. Level premiums work the opposite way--they become less expensive as you grow older.

If you wish to secure your future and your income with income protection insurance, talk to our consultants today. They are ready to help you find the best policy for you and will provide you with rate comparisons of Australia's top insurers. So don't delay. Contact us today!

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Published on May 5-th, 2013 in Income Protection Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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