Think HBR

Six reasons to have Income Protection cover

Mark Hoskins
Australian Financial Risk Management (AFRM)
More than 85% of Australians could not support themselves financially in the event of illness or injury. Here are AFRM’s top six reasons to have Income Protection cover.
1. Provides replacement income if you can’t work
If you are unable to work at any stage during the rest of your working life, you will have a replacement income stream to provide for your ongoing living costs. This monthly benefit means you and your family can keep on top of everyday expenses such as food, petrol, education fees, credit card debt, mortgage payments and everyday bills and you can maintain your standard of living.
2. Your retirement and future plans won’t suffer
You can have peace of mind knowing that if there was a reason you could not work, you can still contribute to superannuation for your future. You won’t have to worry about the implications of losing a vital income stream.
3. Takes the stress off medical costs
Should you suffer an event that affects your health, there is the potential for unforeseen costs such as medical expenses and rehabilitation costs. Your income protection payments can help to ease these costs. It means you can focus on recovery, rather than the financial stress.
4. It’s there for you when workers comp and work arrangement policies are not
Workers compensation will only cover you for accidents which occur at work. Income Protection, on the other hand, covers you 24/7 worldwide for accidents and illness. 75% of accidents occur while a person is at home or doing recreational activities, compared to 25% of injuries being work related. Workers Compensation also provides no cover for an illness that is not directly attributable to your employment, like heart attack, stroke, cancer etc. Many Income Protection policies that are part of a work arrangement have a 2 or 5 year benefit period. That leaves a big gap until age 65.
5. Your policy often covers more than you think
You don’t always need to be off for the entire waiting period in order to be able to claim on many income protection policies.
Even a broken bone or fracture, could lead to an automatic payment under many Income Protection contracts, irrespective of how long you are off work. Involuntary unemployment could allow you to have your premium waived for a set period. And in many contracts, a hospital stay of three or more days could get you a partial payment. Even if you claim for these things, it will not impact the premium on your policy.
6. It’s fully tax deductible
Income Protection is fully tax deductible, which helps with the cost of the cover. The biggest asset you have is the ability to earn income during your working life, it’s worth protecting it.
For further information contact Mark Hoskin or Lyn Strong on (02) 4927 0001, email or or visit
Mark Hoskin Mark Hoskin
is Executive General Manager (NSW at AFRM). Mark has over 20 years experience in the financial planning/insurance industry. Mark specialises in the management of business and personal risk relating to insurance contracts and their analysis.