Income protection

Income protection Insurance provides financial support if you're unable to work due to illness or injury. It helps cover a percentage of your income to ensure you can manage your expenses while recovering.

The level of cover you need depends on your personal circumstances, like your income, expenses, and lifestyle. Tools like the Avant Life Insurance Needs Calculator can help guide you, or you can speak with an Avant Life Insurance Adviser for tailored advice.

The cost of income protection varies depending on your individual circumstances. Factors that can influence the premium include:

• Benefit amount: Income protection will cover a percentage of your earnings; the higher your benefit amount, the more expensive your premium will be.
• Waiting period: This is the time you must wait to receive income from the policy, after you make a claim. Having a longer waiting period before you’re able to make a claim will generally provide a cheaper premium; waiting periods usually range from a couple of weeks to a few months.
• Benefit period: This is the maximum amount of time the income will be paid out, for the period you continue to meet the conditions of not being able to work due to the injury or illness. Your premium will become more expensive if you have a longer benefit period (i.e. if you’re paid out over a period of five years, instead of two years).
• Personal and lifestyle details: Your age, gender, occupation, current health conditions, smoker status, hobbies and lifestyle all contribute towards your risk rating, and affect the cost of your policy.
• Additional features: You can enhance your policy with added extras, to include indexation, covering superannuation contributions, booster benefits for early recovery, future insurability, needlestick cover and the option to convert to a TPD lump sum. While these options enhance your protection, they may increase your premium, so it’s important to personalise your policy to suit your needs and budget.

Most policies cap the benefit so it doesn’t exceed your usual income, with limits of around 70%. Some salary continuation policies within superannuation funds may offer higher limits, but these are usually restricted to shorter time periods.

Yes, the benefits you receive are considered taxable income. You should factor this into your financial planning.

No, income protection only covers income earned through your work. Passive income, such as rental income or investments, is not insurable.

Yes, many insurers allow you to adjust your policy as your needs evolve.

Own occupation: This policy covers you if you're unable to perform the specific duties of your current job. It is generally more expensive because it offers broader protection, covering you if you can't work in the role you were trained for or employed in.

Any occupation: This policy provides benefits only if you are unable to perform the duties of any job that you are reasonably suited for by education, training, or experience. It is usually less expensive but more restrictive. You may not receive benefits if you can still perform some type of work, even if it's not your original job.

Choosing between these two options depends on your specific job, financial needs, and the level of security you want; Own occupation is typically recommended for specialised professionals or those with higher incomes who want to guarantee they can maintain their lifestyle if they can no longer work in their specific field.

Income protection insurance and salary continuance insurance are both types of insurance that can provide financial support if you're unable to work due to illness or injury. The main difference between the two is how you obtain them, their portability and the cost of premiums. Salary continuance insurance is usually offered as a benefit through a superannuation fund. Income protection insurance you can apply for directly either inside or outside of superannuation.

Yes, but it’s important to understand how they work together. Most policies include an offset clause, meaning any payments you receive from workers' compensation, social security, or other income protection policies are considered. This ensures your total benefits don’t exceed a certain limit, usually 75% of your pre-injury income.

However, there are scenarios when having multiple policies makes sense. For example, you could hold:

• A policy within superannuation with a 30-day waiting period and a maximum benefit period of two years.
• Another policy outside superannuation with a two-year waiting period and benefits lasting until age 65.

In this case, the second policy would start paying after the first one ends, providing extended coverage without overlapping benefits.

Though, holding multiple policies with overlapping benefit periods can be costly and inefficient. It’s always best to speak with a qualified financial adviser to ensure the cover suits your needs.