Before you purchase Income Protection Insurance it is imperative that you have adequate information and fully understand all the significant provisions, and carefully consider the cost of premiums and the total insurance you could derive.
Unlike other forms of personal risk insurance, Income Protection premiums are tax deductible for most taxpayers. That means the after tax cost of the cover can therefore be significantly less than the cost of the premium.
For example, if your income protection premium is $100 per month and your annual income is $42,000 p.a. your annual premium after tax will be $70 per month (your income fits into 30% marginal tax rate brackets and you will receive 30% back when you do your tax return).
You can claim the cost of any premiums you paid for insurance against the loss of your income. You must include any payout you received under the policy for loss of your income on your tax return. You cannot claim a deduction for a premium or any part of a premium which you paid under a policy to compensate you for such things as a physical injury.
To calculate for your possible income protection sum, determine what your income was either from:
This isn't a comprehensive list, so please check product disclosure statements and/or consider getting professional financial advice.
Flexible payments let you choose to pay premiums fortnightly, monthly or quarterly, by credit card or direct debit to suit your pay cycle. So give us a call on 1300 793 143 and let one of our trained advisers help you to calculate your income protection sum correctly.