You might not know, but the end of financial year is a great time to take out insurance. Particularly if you want to ensure you can still receive an income if you’re injured or fall ill. You see, Income Protection premiums are tax deductible.
What is Income Protection?
It is a type of cover that replaces up to 75% of your salary if you are off-work due to sickness or injury. It’s particularly important for the self-employed or small business owners, because their businesses rely heavily on the ability of one person to work.
Imagine something as simple as falling over and breaking an arm occurs. You may not be able to do your regular job, let alone day to day activities. If you have Income Protection, you can make a claim and use the benefits to keep on top of everyday expenses (food, mortgage repayments, bills, etc) and to pay for extra help while you recover.
Isn’t that what workers’ compensation is for?
Workers’ compensation only covers you for accidents at work. But you are actually three times more likely to be injured outside work. Like, playing touch footy on the weekend, or on a skiing holiday in New Zealand. Income Protection covers you 24/7 worldwide. And unlike workers’ compensation, you’re also covered for illness.
What’s so great about Income Protection?
Income Protection is different from Trauma cover or Total and Permanent Disability (TPD) cover, in that your claim payments are made in instalments, not a lump sum. It’s just like getting a regular salary. And, you can customise your policy to suit your individual needs by changing things like the waiting period and the length of time you want your payments to continue. This makes Income Protection one of the most flexible and affordable insurances going around.
And, unlike Trauma or TPD, Income Protection premiums are tax deductible. So, if you take out cover before June 30, any premiums you pay in that time can be claimed back in your tax return for the 2016-17 financial year. Which means if you decide to pay annually, you can claim the full amount paid and rest easy with a full year’s cover.
But what if I already have Income Protection?
You’ve probably heard the hype about health insurance premiums going up and seen all those ads recommending you review your cover to see if you’re paying too much. Well, the same goes for your Income Protection.
As your circumstances change, so do your insurance needs. Got a new job? Then it might be time to increase your cover to make sure it reflects your new salary. Maybe your health has improved and you are eligible for cheaper premiums. Or how about getting more bang for your buck by taking advantage of some exciting new product innovations? And you might be able to do this without going through the underwriting process again. The only way to know for sure is to have an expert take a look at your current policy.
Best of all, if you review and update your cover before June 30, you may be able to claim your new premium as a tax deduction.
So get yourself end-of-financial-year-ready and book an appointment with our insurance partners Monarch Advisory Group today or have a chat to me about this.
Tatiana Coulter – Director