Busting 5 common myths about income protection

There’s a sense of achievement and financial independence that comes with working and building a career,
enabling you to create the lifestyle you want for yourself and your family. Income protection can be one of
the best investments you can make in protecting the life you’ve built, especially if illness or injury prevents you from working.

Are any of these common misconceptions holding you back?

I have sick leave through work, I don’t need income protection

We never plan to be ill or know how long it might take to recover. The limited sick leave allowance you get at work might come in handy for taking a few days off to recover from a cold or flu, but what about if you are off work long term? Income protection provides a financial helping hand when you need a longer recovery time, be it months or years, after an unexpected accident or a more serious illness.

Income protection is very expensive

The beauty of income protection insurance is it can be tailored to suit your needs and how much you want to spend. For example, if you have a lot of leave built up at work, you could look at a longer Waiting Period (how long you need to be off work before you start receiving benefit payment), or, you could consider a shorter Benefit Period (the maximum time you can receive payments for), to make premiums more manageable. Premiums are also generally tax-deductable where cover is held outside of superannuation, putting more cash back into your wallet.

I can’t take out income protection if I’m self-employed or have pre-existing health conditions

When you apply for income protection there is generally an underwriting process to help assess the risk of your medical, lifestyle and financial situation, and to calculate the right premium for your cover. Depending on your circumstances, insurers may be unable to provide you with all or some parts of the cover, however you may also find that they are more flexible than you had anticipated. In addition, not all insurers have the same approach to underwriting, meaning that in some cases it’s just a matter of finding the right insurer.

I don’t need income protection if I have life and TPD insurance

Life insurance pays out a lump sum to your loved ones if you were to pass away or be diagnosed with a terminal illness, and TPD insurance pays out a lump sum if you suffer a disability and are expected never to return to work again. On the other hand, Income protection pays you a regular income while you’re recovering and temporarily unable to work.

I only need income protection if I have a mortgage

While paying the rent or mortgage is a sizeable financial commitment, you’re likely to have other important priorities like growing your family, giving your kids the best education, and living comfortably – that relies on your income. Income protection can make it less stressful knowing you’ll be able to keep up with your financial commitments even if you can’t work due to injury or illness.

If you’d like peace of mind that your income would continue if you were off work for a long time, feel free to reach out to the team at ADR Wealth, we’re here to help.

Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it you should consider its appropriateness for you, having regard to those factors. Always obtain and consider the relevant Product Disclosure Statement before deciding whether to acquire a financial product.