Events such as redundancy, sickness, or disability can play havoc on household finances. Income Protection Insurance can offer you and your family financial security during these difficult times. It gives you an added piece of confidence in knowing that you are covered should disaster strike.
However, not all policies are the same, so it’s important to understand the variations between policies to ensure you are properly covered.
What do Income Protection Policies Cover?
In Australia, many Income Protection policies only offer cover if you cannot work due to sickness or disability. So even if you have Income Protection Insurance, you may find yourself unable to claim if you are made redundant. If your Income Protection Insurance is currently provided as part of a life insurance policy this is certainly the case as Australian law currently stipulates that life insurance companies cannot sell unemployment cover. However, there is an ever-increasing amount of general insurance products which will cover you in the case of redundancy.
When am I Entitled to Claim?
If you do have Income Protection Insurance that goes beyond sickness and disability, it is important to check that your situation fulfils the policy requirements. For example, certain policies may only cover you when unemployment is unforeseeable or through no fault of your own. So if you become unemployed because your contract has expired, or because of the loss of a driver’s licence, you may not be covered. Likewise, certain policies will require that you actively look for work. And any paid work you do find, regardless of the amount of work this may be, could negate any entitlement.
Is Income Protection Insurance Worth it?
The right Income Protection Insurance can give you the security of knowing you are covered in many instances where you may find yourself out of work. Whilst Australia does have laws that offer entitlements in the case of redundancy or illness, these entitlements only stretch so far. Income Protection Insurance can help ease any strain these scenarios will place your household finances under. It gives you the confidence of knowing you and your family are covered in such an unfortunate event. And offers the security of knowing you and your family can remain financially sound.