Liability Insurance Australia :: Articles
SHARE

Share this article!

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
While 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

Share this article:

Car Loans - Quick & Easy
If you are in the market for a new or used car, then we'd like to help you arrange the money. Our car loan & leasing service is backed by a national panel of car loan specialists who will establish your eligibility, find lender/s offering the best deals for your situation - and help you through the approval and settlement process. No charge to you - and no obligation to proceed with any recommendations offered.
Need Money for a Bike?
We offer fast, free, easy access to the best Bike Loan rates and options in the Australian market. Simply use our 3-minute Bike Loan enquiry form to see if you qualify … and you'll get instant access to our national specialist Bike Loan broker network for free advice and assistance through the approval process. No charge, no obligation!

Business Insurance Articles

Proven Strategies for Slashing Your Business Liability Insurance Costs Proven Strategies for Slashing Your Business Liability Insurance Costs
Welcome to our comprehensive guide on public liability insurance, an essential safeguard for businesses across Australia. Navigating the complexities of liability insurance can be a daunting task for many business owners, but it’s a critical component of your business protection plan. If incidents such as accidents or property damage occur, liability insurance is the barrier that stands between your business and financial calamity. - read more
The Importance of Public Liability Insurance in the Australian Labour Hire Industry The Importance of Public Liability Insurance in the Australian Labour Hire Industry
The Australian labour hire industry has seen a significant rise in recent years, and with this growth, comes new and unique risks that companies in this industry must be prepared to navigate. One such risk is the potential for accidents or damages to occur in the workplace, which is where public liability insurance comes in. This article will explore the definition of public liability insurance and why it is so important for labour hire companies in Australia. - read more
The Cost of Safety: How Much Public Liability Insurance Does Your Australian Business Need? The Cost of Safety: How Much Public Liability Insurance Does Your Australian Business Need?
As a business operating in Australia, understanding the ins and outs of public liability insurance is not just recommended, it's essential. This type of insurance serves as a safeguard, protecting your business against the financial repercussions of lawsuits and claims arising from third-party injuries or property damage due to your business operations. In a world where one unintended mishap can lead to costly legal battles, public liability insurance stands as your first line of defense. - read more
Reducing Your Risks: Public Liability Coverage Tips for Trade Professionals Reducing Your Risks: Public Liability Coverage Tips for Trade Professionals
For tradesmen and trade professionals, venturing into the world of business comes with its set of challenges and risks. Among the myriad of precautions to consider, one critical safeguard stands out for its ability to protect both the tradesperson and their clients: Public Liability Insurance. This form of coverage is not just a safety net; it is a cornerstone of a responsible business practice within the trade industry. - read more
The Impact of Environmental Liability on Australian Business Operations The Impact of Environmental Liability on Australian Business Operations
In today's ever-evolving business landscape, the significance of environmental sustainability and legal accountability is increasingly paramount. Australian enterprises, in particular, are encountering a growing need to understand and manage environmental liability. This reality not only influences corporate image but also carries substantial financial and legal ramifications. - read more

Insurance News

Insurers Bet Big on AI for Streamlining Claim Resolutions Insurers Bet Big on AI for Streamlining Claim Resolutions
28 Mar 2024: .Paige Estritori

Australia's insurance sector is witnessing a transformative embrace of artificial intelligence (AI), with a sweeping 90% leaning on, or on the cusp of adopting, chatbots and advanced AI to enhance claim handling, as noted in Gallagher Bassett's yearly analysis. This heightened integration reflects the sector's aim to bolster operational speed and efficacy, with a remarkable 98% of insurers predicting immense benefits from such advancements. - read more
Spike in Weather-Related Insurance Claims During Summer Revealed Spike in Weather-Related Insurance Claims During Summer Revealed
27 Mar 2024: .Paige Estritori

Over the recent summer period, NRMA Insurance reported an influx of claims linked to severe weather, with a record not seen since the autumnal months of 2022. An overwhelming number of these, about 85%, have been ascribed to weather disturbances such as storms and hail, per the updated Wild Weather Tracker statistics. - read more
Federal Court Upholds Insurer's Policy Update Clause Federal Court Upholds Insurer's Policy Update Clause
26 Mar 2024: .Paige Estritori

The Federal Court has provided a green light to Auto & General’s home and contents insurance policy terms, confirming the necessity for policyholders to inform the insurer about significant changes affecting their coverage. The company emerged victorious in a legal scrutiny instigated by regulatory body ASIC over the disputed clauses. - read more
Survey Reveals Time Crunch for Brokers Facing Compliance Hurdles Survey Reveals Time Crunch for Brokers Facing Compliance Hurdles
25 Mar 2024: .Paige Estritori

Steeped in administrative duties, brokers are dedicating over three hours daily to data processing tasks, finds a survey issued by an insurance software company. Further intensifying their plight, nearly one-fifth have reported growing complications and time expenditure in compliance adherence, underlining a pressing industry conundrum. - read more
Revolutionizing Carbon Trading with Novel Insurance Offering Revolutionizing Carbon Trading with Novel Insurance Offering
24 Mar 2024: .Paige Estritori

In an innovative move within the environmental finance sector, CFC has introduced a cutting-edge insurance product specifically targeting the burgeoning carbon credit market. This pioneering Carbon Delivery Insurance is designed to mitigate the risks associated with non-delivery of carbon credits, reinforcing market confidence and integrity. - read more

Start Here
Your free liability insurance quote comparison starts here!

Cover Amount:
Postcode:
All public liability quotes are supplied to you free and without any obligation. We respect your privacy.

Knowledgebase
Public Liability Insurance:
Insurance which provides protection against liability to third parties.