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Income protection insurance Frequently Asked Questions (FAQs)

Frequently Asked Questions (Frequently Asked Questions)

What is income protection insurance in Australia?

In Australia, income protection insurance can be taken out by employed Australian residents of working age, who work at least a minimum amount of hours per week, and can be available through superannuation or direct insurers. For the policies that can be arranged directly through Choosi, you’ll be able to apply for a policy if you’re an Australian resident aged between 18 and 60 and working at least 15 hours per week.

If you are unable to work because of sickness or injury, income protection insurance can provide you with a regular monthly payment, so that you can continue to manage your expenses and bills while you recover.

What is an income protection insurance policy?

An income protection insurance policy can be taken out by Australian residents who rely on their income to manage their expenses and cost of living, or don’t want to dig into any savings they may have if something unexpected happens. The policyowner can receive monthly benefits if they are unable to work due to sickness or injury.

With Choosi, cover can be taken out over the phone with no medical, blood test, forms or proof of income needed to apply, and you have the flexibility to apply for the benefit period and waiting period that suits your individual needs and budget.

How does income protection insurance work?

Income protection insurance can provide you with monthly benefits if you’re unable to work due to a sickness or injury. For policies available directly through Choosi, you can apply for cover up to 70% of your pre-tax income, up to $15,000 per month. To claim for your injury or sickness, you must be:

  • Unable to perform the usual duties of your occupation, where you earn your source of income from; and
  • Receiving ongoing care from a medical practitioner in relation to the injury or sickness you are claiming for; and
  • Unable to earn your income and are suffering a loss of income; and
  • Unable to work for longer than your chosen waiting period of 30 or 90 days; and
  • Not earning money from any other source, such as Workers Compensation or sick leave benefits.

Is income protection insurance worth it?

Income protection insurance may be worth considering if you rely on your income to pay your bills and maintain your lifestyle. Life’s unexpected twists, like an injury or sickness, can disrupt your financial stability – whether you’re earning a salary, running a small business, or are self-employed. Income protection insurance can pay you a monthly benefit to help cover your living costs while you recover.

Do I need income protection insurance?

To decide if you need this type of cover, you should consider your regular financial obligations – utility and grocery bills, rent or mortgage, school fees, fuel or cost of commuting, and other weekly or monthly expenses. If you are unable to work, consider whether you would be able cover these expenses without facing financial stress.

Income protection insurance could be beneficial if you don’t have enough funds to cover your expenses while you’re off work and not earning an income for a period of time due to sickness or injury.

Everyone’s financial situation is unique to them, so if you are uncertain whether income protection insurance is something you need, speak to a financial advisor.

What does income protection insurance cover?

Income protection insurance policies available directly through Choosi can provide monthly payments to help cover expenses if you’re unable to work due to sickness or injury. You can cover up to 70% of your monthly pre-tax income, up to $15,000 per month – for a benefit period of 6 months, 1 year, 2 years, or 5 years.

Find out more about what income protection insurance covers.

Does income protection insurance cover redundancy?

Redundancy is not covered under income protection insurance. It provides cover for a benefit period, while you recover from a sickness or injury and prepare to return to work.

Does income protection insurance cover mental health?

Yes, income protection insurance policies available directly through Choosi cover mental health events that occur after you take out cover (provided the condition is not pre-existing).

What does income protection insurance not cover?

There are certain events that income protection insurance doesn’t cover, such as an injury or sickness arising from a normal pregnancy, childbirth, or miscarriage, or intentional self-inflicted activities, attempted suicide, criminal or illegal acts, and engaging in war, riots or civil commotions. Read the relevant PDS to learn more.

How long does income protection insurance last?

For income protection insurance policies that can be arranged directly through Choosi, your policy expires on the policy anniversary after your 65th birthday.

How much does income protection insurance cost?

The cost of your income protection insurance policy will be determined by things like the duties you perform at work, your age, gender, smoking status, and the level of cover you need. Request a quote or get Choosi’s Team of Choosers to call you back.

Is income protection insurance taxed?

Premiums you pay for your income protection insurance policy can be tax deductible if purchased through a direct insurer (and not through a super fund).

Also, if you make a claim and receive benefit payments from your insurer, the money you receive may be required to be declared on your income tax return and assessed as income. If you have questions about paying tax while on a claim and receiving a benefit, please speak to a professional.

Is there GST on income protection insurance?

There is no goods and services tax (GST) on income protection insurance as it is input-taxed. You can learn more through the Australian Taxation Office (ATO).

Is income protection insurance tax deductible?

Income protection insurance premiums, can be tax deductible, as stated on the Australian Tax Office (ATO) website. You may be able to claim the premiums you’ve paid as a tax deduction, which can help reduce your taxable income. Speak to a financial advisor to confirm whether you are eligible to receive a tax rebate.

How to claim income protection insurance?

You will need to call or write to your insurer, whose contact details will be included in the Product Disclosure Statement of your policy. You’ll be sent a claim form to complete and return to them, along with proof the insured event took place. Your insurer may also ask your doctor (if applicable) to fill out a form. Once completed documents are received, your insurer will assess the claim and pay, subject to approval, without unnecessary delay.

Can I claim income protection insurance if I resign?

Income protection insurance is designed to protect your income if you are unable to work due to sickness or injury. You will not be covered if you resign or quit your job and remain unemployed.

Compare income protection insurance products now

Get cover that’s right for you by comparing a range of income protection insurance policies with Choosi – it’s easy, fast, and best of all, free to compare! Compare, choose, and apply with confidence today!

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