Not sure whether income protection insurance is a vital safety net for you, or just a cost burden you can do without? This article will help you decide.

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Income protection insurance is a financial tool that’s essential for some people, ‘nice to have’ for others, and possibly quite unnecessary for a third group. In other words, there’s no one-size-fits-all answer to whether the premium cost justifies the risk. It depends on your circumstances, so it’s worth examining what the cover provides and the factors that should influence your decision-making.

What is income protection insurance?

Income protection insurance is meant to replace your income, based on your annual earnings in the year before a serious illness or injury that prevents you from working. It can pay up to 90% of your pre-tax income for the first six months of your disability and up to 70% for a further period.

This article sheds light on the importance of worker's compensation and the potential gaps in coverage that individuals may face. It encourages readers to think about their own situation and consider if worker's compensation is adequate, or if Income Protection may be required.

No matter what kind of job you have, there is always a possibility of falling sick or getting injured, regardless of the type of work you do.

That's why every Australian workplace has a health and safety obligation to provide a safe work premises, assess risk and have workers compensation insurance.

What is worker's compensation?

This article explains some of the supplementary types of cover that could be included under an income protection policy.

If you’re working and haven’t yet reached the point of financial independence then income protection insurance should be on your radar. As the name implies, it can help you protect your greatest asset – the ability to earn an income.

At the heart of all income protection policies is the promise to pay the policy owner a regular benefit, usually 75% of their normal income, if they are unable to work due to accident or illness. Payments are made after an agreed waiting period and continue until either the policy owner is able to return to work, or until the end of the agreed benefit period.

Core and supplementary benefits

On average, only ...% of debilitating injuries occur at work or are work-related.

In 201./.. there were ............ compensation claims made for serious work-related injuries in Australia.

The average time it took for a worker to return to work due to a serious injury rose by ... to more than ....... weeks.

In 2....  the median compensation payout for a serious claim was just $..........

This article emphasises the likelihood of needing personal insurance to cover even simple living expenses – not to mention meeting other financial responsibilities.

If you were paid the average annual wage of $..........., you could potentially earn around $............... over a 40-year working life. You would use this money for daily living, for holidays, to accumulate assets like a house and car and to save for your retirement. Being injured or taken ill, for only a short period, could severely affect or even cancel some of these plans.

What would you do?