Income Protection

The value of a good income protection policy

Paula's story*


Paula, a single mother with two teenagers living at home, had her superannuation invested with an industry superannuation fund.  Paula was aware of the need to ensure that her income would not reduce or stop if she had an accident or suffered ill health.

Whilst Paula had arranged income protection insurance through her superannuation fund, she hadn’t realised that it was an "indemnity" policy and would only pay her a benefit for a maximum of two years if she needed to make a claim. The policy also had a 90-day waiting period before she would be paid a claim benefit. As Paula only had limited savings and a small amount of accrued sick and annual leave available to support herself, the 90-day waiting period was not appropriate.


We advised Paula to commence a new "agreed value" policy (outside of superannuation) that would pay her a benefit to age 65, if the need arose. The new policy had a 30-day waiting period. Paula’s outlay was not much more than the previous policy cost, after the tax deductible premium was taken into account, and her Income Protection cover was now more suited to her needs..


* Names have been changed to protect client privacy.

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