What would happen to you and your family if your income suddenly stopped? If you could not work because of an accident or sickness who would pay the mortgage or bills?

Many people faced with this situation would struggle to meet these commitments for several months or even a few weeks unless they had thousands of dollars in cash that was readily available.
To avoid the prospect of losing your home and or suffering financial hardship, a common solution to this problem is income protection insurance.
Income Protection provides a replacement wage and ensures continuity of income while you are unable to work due to sickness or accident. It helps you meet your personal expenses, which are currently paid from your income.

Income Protection Insurance is possibly the most critical of all insurance policies, as it protects your most important asset, your income.

You can insure up to 75% of your earned income from your main occupation. The level of benefit you choose should cover your personal ‘day to day’ expenses. This includes everyday living costs, food, mortgage payments, bills etc.

Premiums paid for income protection are generally tax deductible for people who are self employed or employees.

An Overview of Income Protection Policies

If you already have an Income Protection Policy - will you be penalised at claim time?
If you cannot answer this, don’t wait until you have to claim on your policy. You need to know now what would happen if you claimed on your policy. For example, after your claim has been finalised and you return to work, will your...
•Policy now have an Exclusion?
•Premium be increased with a Loading?
•Insurance Company even renew your policy?

This may occur if you have a Cancellable Policy.

What is a Cancellable Policy?

Simply, it Is where the Insurance Company lets you purchase an Income Protection Policy for one year, as it is renewed on a yearly basis. A Cancellable Income Protection Policy can be altered by the Insurance Company whether you claim on your policy or not.

With a Cancellable Policy there are ongoing disclosure requirements every year. If your personal circumstances changed in any way in the previous 12 months, such as:
•Has your health changed? Were you sick or did you have an accident? Example – you strained your muscles in your lower back, went to the physiotherapist once or twice and you had no time off work
•Did you take medication for a medical condition? Example – your doctor prescribed for you to take medication to manage your cholesterol and you had no time off work
•Did your occupation change? Example – you changed your occupation from a wall floor tiler to a builder
•Have you taken up any new pastimes? Example – you took up diving

To ensure that any future claim is paid and not voided through non-disclosure, it is important that you notify your Insurance Company of any changes before your policy renews.
Cancellable Income Protection Policies give the Insurance Company the opportunity to ‘minimise’ the impact from substandard risks and improve the profitability of their client portfolio.

The Solution - A Non-Cancellable Policy

In a nutshell, a Non-Cancellable Policy can be guaranteed to age 65 and not for one year. Once you have your policy it cannot be altered, no matter what the changes in your personal circumstances are.

If your health has changed, or you take up medication, change occupations, or you are now hang gliding - your policy terms cannot be changed.

A Non-Cancellable Policy is your guarantee of cover and income security. Once you have your policy, as long as the premiums are paid, your policy is guaranteed renewable and cannot be cancelled by the Insurance Company, no matter how many claims you make!

After almost 30 years of providing insurance advice, I am still surprised at the number of workers in the Building Industry who have Cancellable Income Protection Policies. Be aware that Cancellable Policies may be packaged with your General Insurance Policies such as your tool insurance or public liability.

Give ‘Yourself Peace of Mind’

Speak to your Insurance Adviser today to ensure that your policy is Non- Cancellable. The last thing you want to be worrying about should you end up in hospital is, “Will my policy cover me?”

About Ross Forsyth - Ross is the Director of Straight Through Insurance, a full service accredited and authorised Life Insurance Broker. They offer Non Cancellable Income Protection Policies. Ask for details about how we will pay your 2015 NECA Membership Renewal* due on July 1 with your Income Protection - telephone 1800 330 431.

The information does not take into account your personal financial situation, needs or objectives. Therefore, before you decide to buy a product arranged by Straight Through Insurance, or keep a similar product you already hold, it is important that you consider the relevant Product Disclosure Statement to make sure that the product is appropriate for you.

For more information, contact NECA on 02 9744 1099 or email memberservices@neca.asn.au.

To view the straight through insurance brochure, click here.