Income Insurance :: Articles

Loss of income insurance: Case Study

Loss of income insurance: Case Study

Loss of income insurance: Case Study
Rebecca is a single, self-employed graphic designer who works from home. Aged in her mid-30s, she has monthly commitments of a mortgage and car payments and the usual living expenses.

She gave little thought to protecting her income against illness or injury until a friend recently was diagnosed with breast cancer and was unable to continue working.

Fortunately, her friend had taken out income protection insurance. Six months down the track, she is still receiving a regular payment which is helping her and her family to meet the cost of her medical expenses and a mortgage.

This episode made Rebecca rethink her own circumstances. Once her savings ran out, how would she cover her mortgage? And her car payments?

Who would pay for her food and utilities? And any medical bills that were not covered by her private health fund or Medicare?

Insuring your most valuable asset
Image for Insuring your most valuable assetWhile many people would consider their home or their car to be their most valuable asset, it's your ability to earn an income that is most important in shaping your financial future. Statistically, two thirds of working Australians will suffer an injury or illness that will sideline them for 90 days or more. The majority of these people would not be able to pay their mortgage or meet car finance and other loan commitments without adequate income insurance.

Rebecca contacted an insurance broker, requesting several quotes on a policy that would pay up to 75 per cent of her average gross monthly income.

To make the premium more affordable, she elected to have a longer waiting period of three months before the payment took effect because she would have enough in the kitty to cover her costs during those first few months.

The broker informed her that she would actually have to wait a further 30 days before her payment kicked in because she would be paid a month in arrears.

Rebecca crunched the numbers again and found she couldn't string out her finances for an extra month so opted instead for a 60-day waiting period.

The broker then asked about her age, her health, whether she was a smoker, her occupation and the length of time she wished to be insured. Rebecca elected to be covered until the age of 65 and stressed that the policy must be guaranteed renewable; that is, once she took it out, it would be renewed every year regardless of her health.

She also asked that consumer price index increases be factored in.

One of the key features of an income protection policy is a total disability benefit. Examine the definition of this benefit closely to ensure it matches the cover you require.

There are also two distinct types of policies: agreed value, where the amount of cover agreed to in your application is guaranteed for the life of the policy; and an indemnity contract, where the benefit to be paid is determined at claim time and is based on your level of income at that time.

If Rebecca were in a relationship, she might not need income protection insurance, particularly if her partner was not dependent on her income.

However, if you are self-employed and single with no sick leave or are in a relationship where your income is essential to meet commitments, then income protection is definitely worth considering.

Most insurance companies will have application forms that will ask about your medical history. Most will ask permission to contact your doctor to confirm your details.

If there are any issues, you may be required to have a medical. If you have a particular problem, the policy can exclude claims for that condition.

Within an hour, Rebecca's broker had provided several different quotes. She opted for a tax-deductible premium of $1466 a year. In the event of a claim, she would receive $3125 a month, enough to cover her mortgage and her bills until she could return to work again.

Published: Sunday, 1st Aug 2021
Author: 2


Insurance News

Court Denies E-Scooter Negligence Allegation Against City Council Court Denies E-Scooter Negligence Allegation Against City Council
14 Jul 2025: Paige Estritori

An Australian court recently ruled in favour of the City of Joondalup, rejecting a negligence claim lodged by an injured e-scooter rider. The Western Australia District Court found the city not liable for an accident involving insurance broker Kirstin Leibbrandt, who collided with a fence post while riding an e-scooter in the Perth suburb of Hillarys. - read more
Mental Health Surpasses Other Causes in TPD Claims, Doubling Payouts Over Five Years Mental Health Surpasses Other Causes in TPD Claims, Doubling Payouts Over Five Years
14 Jul 2025: Paige Estritori

Recent findings from the Council of Australian Life Insurers (CALI) reveal that mental health issues have become the primary cause of Total and Permanent Disability (TPD) claims. Insurers disbursed nearly twice the amount for such claims in 2024 compared to five years prior. This data originates from the CALI and KPMG's Cause of Claims Results Report, highlighting a significant shift in the nature of insurance claims. - read more
Impact of Trump Tariffs on Global Insurance Industry Impact of Trump Tariffs on Global Insurance Industry
11 Jul 2025: Paige Estritori

According to Swiss Re’s latest Sigma report, the growth of property and casualty premiums is moderating in both Australia and globally. This moderation is primarily driven by a slowdown in rate hikes. Additionally, the Trump administration's America First trade policy is putting further pressure on the insurance sector. - read more
Navigating Changes in Australia's Life Insurance Advice Landscape Navigating Changes in Australia's Life Insurance Advice Landscape
10 Jul 2025: Paige Estritori

The conversation on the shifting dynamics in Australia's life insurance advice sector featured Zurich Australia's head of adviser channel, Kieran Forde, and Hayes & Co director, Katherine Hayes. They engaged with editor Chris Dastoor to spotlight the current market conditions and future prospects for financial advisers in this domain. - read more
ASIC Challenges Federal Court's 'Fair Term' Ruling ASIC Challenges Federal Court's 'Fair Term' Ruling
09 Jul 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) is appealing a Federal Court decision regarding the wording of a 'pre-existing condition' clause in certain HCF Life insurance products. The court previously determined that while the wording had the potential to mislead consumers, it did not constitute an unfair contract term under the current laws set out in the ASIC Act 2001. - read more

Life Insurance Articles

Understanding Income Protection Insurance: A Comprehensive Guide for Australians Understanding Income Protection Insurance: A Comprehensive Guide for Australians
Income protection insurance is an essential component of financial security for Australians, designed to provide a safety net by replacing a portion of your income if you're unable to work due to illness or injury. Despite its critical role in safeguarding livelihoods, it's often overlooked in personal financial planning. - read more
Understanding the Process: A Beginner's Guide to Income Insurance Claims Understanding the Process: A Beginner's Guide to Income Insurance Claims
Income insurance, an often-overlooked component of financial security, is gaining traction among Australia's burgeoning self-employed population. In an economy where traditional employment is no longer the sole path to success, this form of insurance has become a cornerstone for proactive financial planning. Touted as a safety net, it ensures that personal livelihoods and business operations remain secure in the face of adversity. - read more
How Income Protection Insurance Can Safeguard Your Financial Future How Income Protection Insurance Can Safeguard Your Financial Future
Income protection insurance is a type of insurance policy designed to replace a portion of your income if you are unable to work due to illness or injury. This financial safety net can help cover essential living expenses, such as mortgage repayments, utility bills, and daily costs, ensuring you maintain your standard of living during tough times. - read more
Income Protection Insurance vs. Total Permanent Disability: What’s the Difference? Income Protection Insurance vs. Total Permanent Disability: What’s the Difference?
When life throws unexpected challenges your way, being financially prepared can make all the difference. This is where Income Protection Insurance and Total Permanent Disability (TPD) Insurance come into play. These two types of insurance provide a crucial safety net, ensuring that you and your family remain financially stable even when you're unable to work due to illness or injury. - read more
Income Insurance: The Safety Net for Your Financial Goals in Australia Income Insurance: The Safety Net for Your Financial Goals in Australia
Financial security is pivotal for anyone striving to meet their life goals, be it owning a home, educating children, or ensuring a comfortable retirement. In Australia, where uncertainties can disrupt our best laid-out financial plans, having a safety net in place is essential. Income insurance offers just that—protection against the unforeseen events that could impact your income earning abilities. - read more
How to Determine the Right Income Protection Coverage for Your Needs How to Determine the Right Income Protection Coverage for Your Needs
Income protection insurance is a type of coverage designed to replace a portion of your income if you're unable to work due to illness or injury. - read more
Income Protection vs. Life Insurance: Why You Need Both Income Protection vs. Life Insurance: Why You Need Both
Insurance plays a crucial role in safeguarding our financial future. It serves as a safety net, ensuring that we can manage unexpected events without severely impacting our financial stability. For Australian adults, having the right types of insurance coverage is essential for peace of mind and financial security. - read more
Understanding the Process: A Beginner's Guide to Income Insurance Claims Understanding the Process: A Beginner's Guide to Income Insurance Claims
Income insurance, an often-overlooked component of financial security, is gaining traction among Australia's burgeoning self-employed population. In an economy where traditional employment is no longer the sole path to success, this form of insurance has become a cornerstone for proactive financial planning. Touted as a safety net, it ensures that personal livelihoods and business operations remain secure in the face of adversity. - read more
Income Insurance: The Safety Net for Your Financial Goals in Australia Income Insurance: The Safety Net for Your Financial Goals in Australia
Financial security is pivotal for anyone striving to meet their life goals, be it owning a home, educating children, or ensuring a comfortable retirement. In Australia, where uncertainties can disrupt our best laid-out financial plans, having a safety net in place is essential. Income insurance offers just that—protection against the unforeseen events that could impact your income earning abilities. - read more
Income Protection Insurance vs. Total Permanent Disability: What’s the Difference? Income Protection Insurance vs. Total Permanent Disability: What’s the Difference?
When life throws unexpected challenges your way, being financially prepared can make all the difference. This is where Income Protection Insurance and Total Permanent Disability (TPD) Insurance come into play. These two types of insurance provide a crucial safety net, ensuring that you and your family remain financially stable even when you're unable to work due to illness or injury. - read more

Start Here !
disability protection
Apply now for your free Insurance assessment and price comparisons!

Start Here

Monthly Income Benefit:
Postcode: