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  1. #1
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    Default Income protection insurance / life insurance

    I am so confused!

    As we're done to one income at the moment we're looking into getting income protection for DH. I didn't realise there were so many different options.

    Any recommendations for companies?

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    Oh wow, I remember when we did this a few years ago. It was a NIGHTMARE! We ended up going through a broker, and it made it very easy.

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    We have just been through all this to make sure we were covered for everything!

    DH switched to his companies super fund which offers income protection plus a higher death/disablement payment. I am covered for death under my super. Didn't worry about income for me as DH is the main earner.

    We also took out trauma cover from AMP which cost about $120 per month and covers us and the kids for things like cancer, heart attack etc. Gives us a $25K payout on diagnosis and then $75K after that.

    We used a financial planner, he didn't charge us as he get a commision from the trauma cover we took out.

    Hope that helps.

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    Buttoneska is offline Winner 2010- Most Community Minded Thread Award
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    I would recommend seeing a financial adviser and getting some proper advice.

    There are alot of companies advertising online and on the telly, but be mindful of who they actually are and what they actually offer.

    You can get insurance through super which means the premiums are also paid out of your super rather then you paying direct. Or you can pay direct.

    The other main options wiht insurance are:
    1. Premium structure - step; starts cheaper and increases as you get older. or level - which is the same premium ongoing (generally starts out higher compared to step but ends up cheaper by the time you get older). Depending how old you are at time of insurance adviser may recommend different options. *most of these premiums will increase each year with CPI)
    2. Cover: can be aged/unit based - say 1 unit is worth $x depending on your age and you have purchased 5 units so at age 30 it's worth $300k and at age 50 $50K etc. basically the value decreases over time. Or the other option is to have a set level of insurance (say $300k regardless of your age)
    3. IP options: Aside from the level of cover you want (generally you can insure for up to 75% of your income) you can also select the waiting period and benefit period. The longer the waiting period generally the cheaper the premium. And again the shorter then benefit period the cheaper the premium. You can have a waitin gperiod from 14day up to 90days or maybe even longer. And you can have a benefit period from 2yrs to age 65.(again an adviser who assess your need can suggest what would be best)

    Also ask about the underwritting/claim process - some companies underwrite you and then offer you insurance. (Underwritting means they assess your health and financials and offer you terms). Other companies will offer you terms without underwritting and then when you claim they will assess you. Just check all the criterias and terms etc - not much point paying for insurance that won't pay out if and when you need it.

    This isn't advice of anyshort - just my thoughts on the matter. Definately go and see a proper adviser.

    We have Life/TPD/IP for my hubby and I have Life/TPD/Trauma for myself.

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    I agree to seek professional advice. It is very complicated. We didn't get advice when we got it the first time and the process was long & complicated and we didn't get all the cover we needed - amount or type and then changing it last year was a huge process.

    I looked into getting income protection through my super fund increased, but they stop paying it out after 2 years and I think they don't pay if you're not currently employed by a company that is putting money into the super fund. I didn't want to risk that. I know super rules have recently changed, but in my industry I only had a choice of 2 super funds until very recently. In the future if I want to change to another super fund (away from my current one) I would lose all my insurance which would not be good.

    So, I went with MLC. The forms were shocking, but once they were done, they were done. I liked going with a company that assessed me medically and although I ended up a spine exclusion (thanks to a previous back injury) at least I know that's my only exclusion. If I went with one of the ones on the TV saying you don't need to supply medical information they wouldn't let me know what they would/wouldn't cover unless I claimed. The issue is that they will try & say that I had symptoms of the condition in question before I took out insurance and refuse to pay out claims. I didn't want to risk that.

    There are lots of issues to look into with income protection. There's a delay between the incident and when they start paying (1, 2, 6 months, etc) and the longer the cheaper the insurance. There's a finite end to when they will stop paying (12 months for some funds, 2 years for quite a few, and age 65 for some - clearly the latter is better value for money, but also more expensive - but imagine you are injured & can't work at all, you would need that insurance long term, not just for 2 years). There are income proving requirements too. They ask for your income to be proved and they will provide a proportion of that for your payout - usually 75%. Some companies will pay 75% of your income averaged over the previous 2 pay periods (but what if you're on unpaid leave at the time, or temporarily working part time??). Other companies ask for proof when they provide the insurance quote and that amount is guarenteed for 2 years (that's what MLC has done for me). That was great for me, cause I got the insurance when I was employed and paid well, but then I was about to change to being self-employed and then taking maternity leave, so my pay dropped off dramatically, but will eventually increase to the previous level again.

    Make sure you get life insurance for yourself too if you don't have it. It's so much easier to fill in all the forms/etc when you don't have health issues and the older you are the more issues that arise and the more potential tests/reports they will want before approving insurance. Remember that if something happens to you your dh will still need to look after the children/etc and it gives him the option of stopping work, but keeping the house/schools/etc going, or paying for someone to help out while he works and yet doesn't need to worry about the costs of everything.

    Don't let the complexity scare you off. We nearly upgraded our insurance a few years ago, but got scared off, then dh hurt his back and so now on his policy he has a spine exclusion too

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    Thanks so much everyone. It is a mine field isn't it?

    I think we definitely need some expert help - did you go by recommendations for brokers etc? Or did you just go through a bank?

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    Sometimes u can get it through ur superannuation, so might be worth calling them to check.

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    I checked with iselect and ended up going with Tower for both. I hate having another expense but it gives me peace of mind!
    I checked out the income protection offered by our super & it didn't suit. Can't remember why, it was a while back! At least income protection is tax deductible.


    My little munchkin due May 2012! So to keep me busy till then, I'm learning how to use my iPhone.

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    Were both with tower and I love the piece of mind.


 

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