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Income protection insurance

Save through your super fund

Most people assume that they’ll earn a wage or salary until the day they retire. But what happens if, for some reason, you’re unable to work for a period of time?

Will you (and/or your family) have enough to live on? Will you be able to cover your mortgage or other loans?

Income protection insurance is designed to ease these concerns, by paying up to 75% of your current income if an injury or illness results in you not working for a period of time.

Who should get income insurance?

Income protection is a wise choice if:

  • You have family that relies on your income, and/or
  • You’re the sole income-earner, and/or
  • You have a mortgage.

Cover through super

The majority of superannuation funds offer some level of income protection cover as an optional extra to account-holders, with insurance premiums determined by how much you want to be covered for.

Usually, your cover will be in the form of a percentage of your current income.

What’s more, since super funds in Australia have huge buying power, they’re generally able to negotiate better rates than most individuals.

Income protection insurance comparison 

Comparison tableIncome Protection insurance in superIncome Protection insurance outside super
How is the insurance premium paid? Regular deduction from your super Paid directly by you
How are policies renewed? Automatically By letter
Can providers get volume discounts? Yes Not usually
Is it part of my super? Yes – by opting in No – it’s additional

Working out the right level of cover

Because everyone is different, it’s worthwhile taking the time to compare different income protection insurance policies, and to calculate your potential needs if you’re unable to work for a while due to injury or illness.

Usually, the more people in your household, and/or the greater the debt you have, the more cover you’ll need.

There is normally a waiting period of 30 to 180 days before benefit payments begin, and payments are generally limited to a maximum of two years.

It is also important to note that you can only insure income that you receive from personal effort or work, which means you can’t insure income from investments etc.

Getting or tailoring insurance through an Industry SuperFund

If you’re already a member of an Industry SuperFund, all you need to do is check your latest superannuation statement to see if you have income protection insurance, and if so, what your current cover is. If you want to add to it, alter it, or start it, simply call your fund and chat to one of their consultants about a quote.

If you’re not an Industry SuperFund member, you can join up easily. Just choose the Industry SuperFund that’s right for you, head to their website and follow the links.