Think for a moment – what is your most valuable asset? Is it your house? Your superannuation? Investments?
Savings? or something else?
Depending on your age, generally, your most valuable asset is that intangible – your ability to go to work and generate personal exertion income.
Whilst the overwhelming majority of Smith Coffey clients have comprehensive Income Protection cover, this is a
timely reminder that not only is the insurance cover very valuable in the event that they are unable to continue working due to sickness or injury, but that the Australian Tax Office is subsidising the cost by virtue of the tax deduction received on the premiums paid every year.
Typically, Income Protection policies in Australia cover a maximum of 75% to 80% of personal exertion Income, with this being reduced as income exceeds around $320,000 pa. Historically, insurers used to allow Lifetime Income Protection cover, but for some years now have only allowed cover to a maximum age of either 65 or 70.
Of the many valuable benefits of Agreed Value comprehensive Income Protection cover, some of the main ones include an own occupation definition for both total and partial disability. The insurer will pay a claim if after the set waiting period the client is unable to work in the occupation for which they are qualified to perform.
There were over 42,000 Income Protection claims paid out in Australia in 2014, which equated to more than 1.427 billion dollars (source—The Risk Store).
Importantly also is the worldwide 24 hours a day cover and in the event of a long term claim, benefits are indexed to the CPI. Of concern to many of our clients that engage in exposure prone procedures is occupationally acquired blood borne diseases like HIV and Hep B & C. Rest assured that for quite some time Smith Coffey have been very particular to only recommend Income Protection policies that provide comprehensive cover in this
Why can’t you cover 100% of your income with an Income Protection policy?
The maximum limit on cover has been in place since the sixties in Australia and essentially is there to provide an incentive to return to work, sooner rather than later. The experience globally is that any percentage paid over the above limits results in claims of longer duration, which in effect means higher premiums for policy holders. Time and time again Smith Coffey have seen insurers pay Income Protection claims in a timely manner which certainly
provides peace of mind at a time when the last thing on their mind is having to worry about ongoing cash flow requirements.
With regular reviews at least once every year or two, your Smith Coffey consultant ensures that you have adequate cover in place to protect against what we all hope never eventuates. If for some reason your income has increased significantly and a review has not been done recently, please contact your Smith Coffey consultant. Income Protection cover provides both valuable cover and peace of mind that, should you ever find yourself in a position where you can’t work, you will have replacement income for the insured amount.
For more information visit www.smithcoffey.com.au or call Smith Coffey on 9388 2833 to discuss.