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There are many different options when it comes to income protection:
- How much of my income would be covered?
Your occupation type and employment status would determine the sums insured figure but, in most instances, the income protection would cover you for 75% of your income on a monthly basis plus your super guarantee.
- How long do I have to wait to be paid?
Income protection would be paid in relation to the waiting period selected, some insurers cover you from 14, 30, 90 days of the incident, required all conditions are met. If you talk to your insurance providers or advisers then even 2 year waits can be achieved, required you have the means of leave and funds to get you by in this time. It is always a case by case basis. But the waiting period is the selected or required period before you get your first payment. People sometimes opt to have longer waiting periods which does influence the premium cost. Generally, the longer the waiting period, the cheaper the premium.
- How long can I be paid for?
Depending on your personal circumstances, you can be covered for a period of 2 or 5 years or till age 65 or 70. Most default covers in your superannuation will cover you for 2 years; this is a good start but if you want to ensure that you are covered for serious illness or injury, physically or mentally it would be wise to look into long term covers that cover your working life.
- Premium structures
It is always great to have a discussion with your insurance provider or adviser around what is the most appropriate insurance premium structure for your personal situation. There are two types of premium structures; the first is stepped, this structure is more cost effective in the short term but increases year by year in cost. The second is level premium, that is more expensive in the short term but remains the same premium cost year by year. It is wise to look into level premiums when you are young as it can be cheaper over the long term if you set them up at a young healthy age. The positive feature of stepped is that if it was used to cover your debt obligations, the sums insured amount could be reduced as your debt lowers and therefore reduces your premium costs.
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