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Usually, most people take out life insurance for the purpose of making sure that their families are protected when they die. This move is tactically sound as it ensures that one’s family is taken care off after one dies. However, most people overlook another equally important insurance that should be taken. And that is income protection insurance.
What Is Income Protection Insurance?

Income insurance is a type of income cover that pays up the policy holder a fixed amount of money of up to 75% of his or her regular income every month if unable to work due to illness or injury. It is a way to make sure that you will be able to pay your regular monthly bills and expenses in the event you become ill or injured and unable to work.

Who is the Potential Candidate of Income Insurance?

The great thing about this income protection insurance Australia is that most persons who are employed and with Australian permanent residency status or who are in the process of applying for permanent residency are eligible for it.

For new immigrants to Australia, a period of established occupation and income is required before income insurance or TPD cover is provided.

What is the Cut-Off Age of Income Protection?

There is a cut off age for these policies which is usually 65 years. However, some insurance companies allow people up to the age of 70 years to get benefits from such policies and in such cases, the policy holder will have to pay an additional premium.
Are There Any Tax Benefits When Buying Income Insurance?
Income protection insurance premiums are fully tax deductible and benefits are treated as taxable income. This means while applying for income protection, the person buying the policy has to declare all components of his income.

What Typically Does An Income Insurance Policy Cover?

With this policy, you will receive regularly a fixed amount every month  similar to receiving a paycheck  if you become injured or ill and unable to work. Likewise, it will also usually pay your superannuation contributions.

However, it is important to note that prior to receiving the first monthly installment benefit, the policy holder has to wait for a certain number of days or months, known as the waiting period. This waiting period can directly affect the amount of premium paid, as i.e. a shorter waiting period means a higher premium.

So when you buy the policy, one should consider how long you'll have to wait after the injury/illness occurs before the insurance will begin paying you. This should depend on the number of paid leaves that you have. This enables you to exhaust any sick leave or other time-off-work benefits you may have before turning to this insurance.

What Typically Does an Income Insurance Policy NOT Cover?

Income insurance does not pay you out forever. When you take out the policy, you choose how long the benefits will be paid to you, generally a year or two. Most companies won't continue your income protection policy if you are over 60.

What is the Additional Coverage for an Income Protection Policy?

Other than receiving regularly a fixed amount every month, there are also other additional benefits that are usually offered for no cost, which may include but are not limited to death benefit, cosmetic, or certain other surgery benefits and transplant benefits. It will also pay out while you're out of work after cosmetic surgery, in a rehabilitation program, or on unpaid leave for maternity, sabbatical, or other reasons.

There are also some policies that will even cover you if you can continue to work, but at a reduced ability than what you could do before your injury or illness. Other optional benefits include paying for the lost income of a family member who must leave work in order to care for you.