My name’s Alastair, and I work for AMP. I’d like to talk to you about income protection. It’s a subject very important to me because of something that happened to me when I was a kid back in Hertfordshire in the UK.
One of my earliest memories was of my dad when he was stretched out in hospital after a serious car accident. I even remember the car he’d been in. It was an old merc with spongy tartan seats. He’d gone driving on a business trip when an old guy in a French van swerved in front of him and caused a massive accident. Dad ended up in hospital for three months. He was extremely grumpy, but life went on for us because he had income insurance. Now with six kids, it was smart that he was covered. Ever since he’s said to us, “Make sure you’ve got that in place.”
Now I live here, and one of the great things about Australia is its superannuation which also gives a lot of people income insurance through their super. That’s what I’ve got, and it’s called income protection or temporary salary continuance. This is great because it basically means if I were to become unable to work due to an injury or illness, then my insurance would give me 75% of my ongoing salary. If you’re on $50 grand a year, you’ll get about $3125 before tax or 75% of your full salary every month.
Income protection protects your ability to earn an income. That really relieves the pressure of having to think about if you were, like my dad, to have a serious car accident. Now you’ll know where the money is going to come from for your grocery bills, for your car payment, and mortgage, etc.
There are certain terms and conditions worth talking about briefly. There are waiting periods and benefit periods. The waiting period is how long you have to wait after your injury till you receive a benefit. For example, commonly this is one month, and that’s what I’ve got. The benefit period is the length of time these payments will continue. I’ve got a two-year benefit period, so that means that if I get paid out in a month and this continues for two years, I’ll still get paid for two years.
You can also get benefit periods of five years or even to age 65, which will pay you for as long as you can remain unable to work due to illness or injury up to that age. You can pay your income insurance out of your salary or you may be able to get some cover through your super. However, remember that if it’s outside super, you have a little bit more control and sometimes you get better features.
That’s a little bit about me and my income protection cover, but you’ll need to think about your own circumstances before deciding what cover is right for you. If you’ve got a financial planner, that’s a great place to start. If not, then AMP has financial planners that can work with you to make sure that you have the best level of cover giving you greater comfort should you be unable to work for any length of time.