Why income protection is so important when you’re young
Increase and retainArticle6 June 2023
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Income protection keeps you in the money
Income protection is your rainy-day friend
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Income protection cover is your best friend if you’re injured or ill and can’t work for a while.
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When you’re young and healthy you may not ever think about life insurance. But it’s not only about someone getting a payout if you die – it can also support you if you get sick or injured and can’t work.
Think about what you’d do if you weren’t able to work and bring in an income for an extended period. You may have some savings you could use, but if you can’t work for a few months they would probably be quickly drained.
Income protection insurance keeps money coming in
You should think of income protection as your safety net for everyday work and play. You can head out and have fun without stress. If you’re unlucky and do have an accident or become so ill you can’t work for an extended period, income protection insurance can help keep money coming in until you get better. This will allow you to concentrate on your recovery rather than worrying about how to pay the bills. It also means this period off work is a temporary blip rather than a long-term blow to your financial health.
Income protection insurance pays a percentage of your salary for a set time. The default is often two years but many funds will allow you to make it longer if you choose.
The amount you’re paid is calculated from your average earnings in the 12 months before your injury or illness.
Waiting period and benefit period
There will be a waiting period between when you make a claim and when the insurance begins to pay out. The longer the waiting period, the cheaper the premiums on your policy.
Likewise, how long benefits are paid for (called the benefit period) will also affect how much you pay for premiums. The longer the benefit period, the more expensive the policy is likely to be.
You may already be covered
The good news is that you may already have income protection insurance as part of the default life insurance provided by your superannuation fund.
Many super funds automatically provide this coverage for their members as part of a group life insurance policy. This may mean a medical check isn’t required to start the policy and there is a default amount of cover provided.
The premium for the policy is paid from your super balance.
To see what sort of cover you have and the benefit amounts, ask your super fund for the Product Disclosure Statement (PDS) or insurance guide. There will be a copy available on the website or through your member portal.
If you’re like most people, you probably don’t think about insurance until you need to make a claim. That’s why it’s a good idea to take a few minutes to review the policies you have in place to make sure they’re right for your circumstances.
If you want to make a change to your insurance cover, your fund can help you with that. Some funds also offer limited financial advice so they can create a plan for insurance cover that accounts for your individual circumstances.
Protecting Your Super changes
Recent legislative changes have shifted how insurance is provided through super.1 Now, anyone under age 25 doesn’t automatically get life insurance when they open a new super account. So, if you’re under 25, you may need to contact your super fund to opt in to having insurance cover.
Another change is that if you haven’t made any super contributions for 16 months or have less than $6,000 in your super account, your premium payments and insurance cover may stop unless you contact your super fund and say you want them to continue. (This may not apply if you work in a dangerous job as your fund may provide automatic cover anyway.) 2
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“Income protection insurance pays a percentage of your salary for a set length of time.”
1 APRA, ‘Protecting your super package – frequently asked questions’, accessed 8 September 2022.
2 moneysmart.gov.au, ‘Insurance through super’, accessed 8 September 2022.
LinkedIn and Socials
LinkedIn post
| Introduction | When you’re young and healthy you may not ever think about life insurance. |
|---|---|
| Body | But it’s not only about someone getting a payout if you die – it can also support you if you get sick or injured and can’t work. You should think of income protection as your safety net for everyday work and play. If you’re unlucky and do have an accident or become so ill you can’t work for an extended period, income protection insurance can help keep money coming in until you get better. This will allow you to concentrate on your recovery rather than worrying about how to pay the bills. It also means this period off work is a temporary blip rather than a long-term blow to your financial health. Income protection insurance pays a percentage of your salary for a set time. The default is often two years but many funds will allow you to make it longer if you choose. |
| CTA | To learn more, read our full article <here>. |
Social post
| Introduction | When you’re young and healthy you may not ever think about life insurance. |
|---|---|
| Body | But it’s not only about someone getting a payout if you die – it can also support you if you get sick or injured and can’t work! You should think of income protection as your safety net. |
| CTA | To learn more, read our full article <here> |
This information provides an overview only on specific topics and may be limited in scope or subject to qualifications and generalisations. It is provided for your use with insureds and superannuation fund members.
The information provided is also designed to be provided to insureds and superannuation fund members under your own name and any applicable licenses. You will need to consider whether the information is required to be changed or qualified in doing so. To the extent that there is inconsistency between the information on this website and the relevant policy, the policy will take precedence. You should take professional advice and review the appropriateness of the information before it is used by you.
This information does not consider any specific personal needs, objectives, or financial circumstances.
© Zurich Australia Limited ABN 92 000 010 195, AFSL 232510. Information within it is current as at May 2023 but may be subject to change. Updated information will be available by contacting Customer Service on 131 551.
