When custom-building a policy for income protection insurance in Australia, there are several key things to remember and avoid. It may seem tempting to neglect to mention anything you feel might work against you and drive up the cost of your premium, but this would be a big mistake. Insurance companies are going to do their homework too, and will leave no stone unturned in processing your claim. If you fail to inform them of any salient information, you will be giving them the perfect opportunity to deny your claim and nullify your policy.
The worst possible outcome is to spend years paying a premium for income protection insurance in Australia to protect yourself in case of emergency, only to find you have rendered it null and void by failing to declare something vital right at the beginning.
Things you must divulge to your insurer before taking out income protection insurance in Australia
The golden rule is – when in doubt, it is better to mention any and all factors you feel might be of interest to your providers of income protection insurance in Australia. Give them all the information you can and let them be the ones to decide which parts are relevant to your policy. Always be completely open and honest about the following:
- Pre-existing medical conditions – You will be required to submit a full medical history before your policy goes live, but if there are any missing pieces of information, you must divulge them. This also pertains to your wider family’s medical history and any potential hereditary diseases and conditions you may fall victim to.
- Dangerous hobbies – If you are a keen off-road motorcyclist in the Blue Mountains at the weekends, this is the kind of information your insurer needs to know.
- Unhealthy lifestyle choices – Heavy smoking, drinking, and/or drug-taking are other factors your insurer needs to be informed about. If you are not comfortable revealing this kind of information to the representative who sells you the policy, ask to send it directly to the insurer’s medical officer instead.
- Occupational dangers – Your chosen insurers will already have a very good idea of any dangers associated with your particular line of work. However, if you have extra duties or responsibilities that may cause additional danger, always mention them upfront.
How to calculate the level of coverage you need from your income protection insurance in Australia
Working out the level of coverage you will need for income protection insurance in Australia is not an exact science, but here are some useful steps to take:
- Start with your take-home pay
- Subtract the amount of any state benefits you would receive if incapacitated
- Now subtract any current work-related costs (travel, food, clothing etc.)
- Add any extra expenses you will incur if you become ill or disabled (electric bills/heating costs, medical equipment, carers, etc.)
If this task is too challenging alone, your chosen insurer should be able to assist, or you can engage the services of an independent financial advisor.
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