Income Protection Insurance With Pre-Disability Earnings

By having Income Protection Insurance you insure yourself against untoward financial loss in your employment.

Income protection is easy to obtain and affordable. It will pay you a livable wage based on your occupation in the event of you being unable to work due to sickness or accident. Income Protection is essential for people who have no other means or source of income other than employment.

It's worth to mention that Income Protection premiums are tax deductible for most tax payers. The after tax cost of cover can therefore be significantly less than the cost of the premium.

Before you purchase Income Protection Insurance it is imperative that you have adequate information and fully understand all the significant provisions, specifically the information regarding pre-disability earnings.

Pre-Disability Earnings

You need to be aware about the amount of claims or payout you are entitled to, should the insurance take effect due to the immediate loss of income. This is where pre-disability earnings are most important.

Pre disability earnings are detailed as an amount of the employee's salary or wage that was in effect before the start of the disability.

"Pre-disability earnings? is defined differently by different insurers. It is usually measured as income earned over the last 12 months, or the best 12 months over a specific period (for example, the previous two years). This could potentially result in a reduced benefit being payable if you have recently earned less than at commencement of the policy.

It is essential that your pre-disability earnings as of the month before the start of disability are noted and endorsed into the policy.

You need to be completely satisfied that the payout you receive, is the same as the income you used to receive, when you were working full time. The amount should also allow for possible increases in income, that you would have been entitled to if you were still working at the time the policy commenced.

So give us a call on 1300 793 143 and allow one of our advisers to assist you.

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Published on November 11-th, 2010 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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