How do I compare Income Protection Insurance policies?

Welcome to the second edition of NobleOak’s content series which offers insights and expertise within Life Insurance. In this blog, we address one of the most frequently asked questions at NobleOak: How do I compare Income Protection Insurance policies?

In essence, Income Protection Insurance can protect your income if you become ill or injured and are unable to work.

Income Protection cover is designed to help you continue to meet your financial commitments while you recover. Most policies pay up to 75% of your salary and are flexible enough for you to choose your waiting period before a benefit is paid, up to a defined maximum length of time (known as benefit period). These choices will impact the premium you pay.

Income Protection Insurance is available either direct from an insurer or through a financial adviser. Whichever approach you take, there are some common things you may wish to consider while comparing policies:

• Make sure the sum insured you select meets your needs, and would enable you and your family to maintain their lifestyle in the event of a claim.
• The waiting period you select should reflect your personal financial situation. For example, would you have enough savings to cover your bills and expenses for a longer waiting period? This would allow you to reduce your premiums.
• The benefit period you select will ensure you receive payments for a shorter term, such as two years, or possibly a longer term, such as through to age 65. The longer payment period would attract a higher premium rate.
• Does the policy carry special additional features, such as a partial disability benefit, where you are paid a proportion of your cover if you can work in a limited capacity?

Waiting periods and benefit periods vary from insurer to insurer, so it’s important to compare your options and choose the insurance provider that gives the best value for your needs.

Many people use comparison sites, such as Canstar and Finder, to help compare the different covers.

NobleOak’s Premium Life Direct product includes comprehensive Income Protection cover where you can insure for up to 75% of your pre-tax income, to a maximum benefit of $30,000 per month. In the event you suffer a serious illness or injury and are unable to work, NobleOak will pay you a monthly benefit for the duration of your disability, beyond the expiration of your nominated waiting period.

If you would like to know more about Income Protection Insurance, please refer to the Income Protection Insurance section of NobleOak’s website, or other websites, such as ASIC’s MoneySmart site.