Don’t let your finances suffer because of long-term sickness

A long-term sickness can cause massive disruption to every aspect of your life, especially your financial stability. For Australians who have to manage family responsibilities and household budgets, losing a source of income can have far-reaching consequences. Here’s how income protection insurance can help mitigate some of those financial challenges and support your recovery during a long-term sickness.

How long-term illness can disrupt your income

Whether it’s physical or mental, a long-term illness can negatively impact your ability to work. Without a steady income, families can struggle to meet everyday expenses like mortgage payments, school fees and medical bills. And these financial pressures compound the emotional and physical toll of the illness itself, which just adds another layer of stress on top of an already stressful situation.

Healthdirect Australia reports that chronic conditions like cancer, heart disease or mental health disorders can build up huge out-of-pocket expenses, even with Medicare and private health insurance. From treatments to medication to rehabilitation, the costs can quickly add up. When savings get drained, it can force families to turn towards credit in the form of personal loans.

What is income protection insurance?

Income protection insurance is a type of cover that replaces a portion of your income if you’re unable to work due to sickness or injury. It’s a support tool to help you handle your financial commitments while you recover, so neither you nor your family will fall into financial hardship.

Key features of income protection insurance

Here are a few features to explore when choosing income protection insurance:

• Flexible premiums: Consider whether stepped or level premiums are more suitable for your financial planning. Stepped premiums start lower but increase over time, while level premiums remain constant.
• Customisable cover amount: Decide how much of your income you want to cover. While 75% is typical, you can choose a different percentage based on your lifestyle needs and budget as well as the policy options available.
• Tax deductible: In many cases, premiums for income protection insurance can be tax-deductible.

Key considerations when choosing income protection insurance 

Keep these things in mind when researching income protection insurance policies:

• Waiting period: This is the time you need to wait from when you are unable to work before your benefit payments can start. Common waiting periods range from 14 days to several months. Choose a period that balances your immediate financial needs with the cost of premiums.
• Benefit period: This is the length of time you will receive benefit payments while you’re unable to work. Options range from 6 months to a few years, and for some policies up to age 65. Consider how long you might need support based on your health and financial situation.
• Policy exclusions: Understand what is not covered by the policy, such as pre-existing conditions or specific types of injuries or sicknesses. Always read the relevant product disclosure statement to understand what these might be.

How income protection insurance can help cover long-term illness

Income protection insurance can be a huge financial help when you need it most, letting you focus on recovery without the added stress of financial uncertainty. The monthly benefit payments from your policy can be used for all sorts of expenses, including:

• Everyday living costs: Essentials like rent, groceries and utility bills so that your family’s daily life remains uninterrupted.
• Medical and rehabilitation costs: Offset expenses not covered by Medicare or private health insurance (e.g. specialist consultations, therapy, modifications to your home).
• Debt repayments: Stay on track with your mortgage and credit card repayments.

The peace of mind that comes with income protection insurance means you can prioritise your health and recovery while knowing that your financial commitments are not being neglected.

Types of illnesses covered by income protection insurance

While the specifics of your cover will depend on your provider, most income protection insurance policies can cover the following, so long as they are no pre-existing conditions (you had them before taking out income protection insurance):

• Chronic physical conditions: Includes serious sicknesses like cancer, diabetes and heart disease.
• Injuries from accidents: Covers workplace injuries and car accidents that render you unable to work.
• Mental health conditions: Conditions like depression and anxiety could be covered, as well as PTSD.

Stay safe financially

While no one wants to imagine themselves facing a long-term sickness, having a financial safety net in place can make all the difference if it does happen. Income protection insurance can be one way to safeguard your financial future, and when combined with an emergency fund it can mean financial security in the face of life’s uncertainties.

Learn more about Guardian Income Protection Insurance to see if it’s something that may suit your needs and request a quote online today.