5 important things about income protection [Infographic]

While health insurance, car insurance, and home and contents insurance are fairly standard considerations for many Australians, less than 1 in 3 Australians (31%) have income protection insurance.

However, income protection insurance can be equally important to consider when protecting your family's financial future.

Income protection insurance exists to ensure that you continue to receive an income to meet your ongoing financial needs if you are unable to work for a period of time due to being sick or injured. 

Here are 5 things you should know about income protection insurance and how it could help you.

1. Life insurance isn’t income protection insurance (and vice versa)

So, what’s the difference?

• Life insurance provides you or your family with a lump sum payment if you fall terminally ill or pass away.
• Income protection insurance provides you with a monthly income if you’re too sick or injured to work.

2. How income protection insurance helps 

Income protection insurance provides regular cash payments for a certain period of the time (after the applicable waiting period) when you can't work due to being sick or injured. It can offer cover for up to 70% of your pre-tax salary for a set length of time – called the benefit period.

3. Income protection insurance is not just for older people

Young people may consider income protection insurance too, as they’re also susceptible to becoming unexpectedly injured or sick. They may consider their savings or resources available and whether they would find it challenging to safeguard their financial well-being if they can’t earn an income.

4. You may be underinsured

Around 3.4 million Australians are underinsured for income protection insurance.

This means if you already have income protection, you should check whether the cover you have still meets your current needs. If not, you may want to consider making some changes.

5. It can offer you peace of mind 

Everyone worries about the future at some time or another. We all want to feel financially secure – especially in the event of the unexpected. 

By providing an income stream during periods when you’re unable to work due to getting sick or injured, income protection insurance can help you to feel financially secure – as you’ll know you have protection to be able to cover the bills and that’s a good feeling.

Find out more about Real Income Protection Insurance and how it could help.