With nearly three million cases globally, and over 200,000 lives lost to COVID-19, it’s no wonder that many Australians across the globe are asking the question:
“Will my income protection insurance cover me if I catch COVID-19..?”
In many cases, the answer will be yes, providing you meet the requirements to claim on your income protection policy, but this week we want to share the top tips to review your income protection cover and ensure that you and your family would be protected in the event that you did catch it.
Let’s start with the basics
Income protection (or salary continuance) cover provides you with an ongoing income in the event you are unable to work due to illness or injury to assist in maintaining your lifestyle needs. The amount should represent a maximum of 75% of your current income. This percentage may differ between insurers and countries, but it’s important to ensure that you have the right amount of cover in place based on your own financial needs and circumstances.
Most income protection policies will have in place what they call a ‘waiting period’, which is the amount of time that you would have to wait after being diagnosed for the first payment to be received. Most insurers will have a 0, 3 or 6 month waiting period but many can offer even longer than this. Typically, the longer the waiting period, the lower the insurance premium will be.
Review your policy t’s and c’s
If you’re concerned about whether your insurance policy does in fact cover you for COVID-19, it’s important to review the terms and conditions of your policy. If this sounds about as thrilling as watching the grass grow, then you can also ask your insurance company directly or your financial planner any questions you have about the terms of cover. They will quickly be able to provide you with these answers and even direct you to the relevant section within the terms of your insurance policy documentation.
Ensure you’re actually covered overseas
Many Australian expats make the mistake of assuming that because they have income protection insurance in place inside or outside of their superannuation fund back in Australia that they will automatically be covered overseas as well. There are many insurance policies, with those inside industry funds being particularly common, that in fact don’t cover Australians who reside overseas. This could be a very expensive policy that you’re paying for even that it doesn’t cover you while you’re abroad.
If you’re not sure whether your policy covers you abroad, call your financial planner or insurance company and ask them the question about whether you’re covered abroad. I would also suggest that you request the information in writing or at least directions to the relevant section of the Product Disclosure Statement (PDS) so that you have some peace of mind that you’re actually covered while abroad.
Check the term of your benefits
Have you ever checked how long your income protection policy is valid for or how long it would continue to pay out for if you were unable to work. Having seen many income protection policies that only have a pay-out period of two years as an absolute maximum, this hardly goes anywhere near covering the worst case scenario of someone in their 20’s, 30’s or 40’s being unable to work and generate an income for the rest of their working years.
If you’d like to review your existing income protection cover, or you don’t currently have cover in place and want to explore what your options are and what the cost would look like, feel free to book an obligation-free discussion with me and we can explore your options and ensure that you’re covered in the event that disaster strikes.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
Australian Expatriate Group is a division of Global Financial Consultants in Singapore providing specialist advice to Australians living abroad.
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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.
*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.