Hello
Looking for suggestions for companies for our income protection insurance?
Partner and I are sole traders. We currently have IPI through our super but if it's structured this way, we cannot claim it through our tax expenses.
Thanks
Income Protection Insurance
Lkatq882022 on 27/08/2023 - 16:21
Comments
OP doesnt necessarily have income protection through super
If OP does its usually paid out after 60 days and only for 2 years.
This is only provided with employer based supernanuation and the employer pays the premiums on your behalf.
Its usually only for total and permanent injuries which prevent you from working.
Besides super premiums are tax deductible for self employed people so not sure what OP is on about.Income protection gives you cover for Temporary and permanent Partial or total disability.
Its also fully customisable.
Dependiong on occupation it can be paid out from 30 days and up to 5 years.
In some cases you can select what percentage of your income you want covered
naturally all this affects your "tax deductible" premiumsOP doesnt necessarily have income protection through super
Did you even read the post? OP clearly says " We currently have IPI through our super "
Dependiong on occupation it can be paid out from 30 days and up to 5 years.
There are policies that pay up to age 65 too.
Incorrect about IP only provided with employer based superannuation. I don't know about every super fund but when I joined Australian Super I was able to set up income protection insurance even before advising my employer of my new fund - in fact I could have had the IP without ever having my SGC directed to the fund, provided I deposited sufficient to cover the premiums.
can't comment about sole trader + tax deduction side of things …
but IPI through your super is an absolute pain to deal with - if you ever need to make a claim (I know firsthand on that) … and when they do eventually pay out … it can be over 6 months from when you first submit a claim, to when you see any money.
best to go outside of super - can't give any recommendations on that.
I have now cancelled all IPI - but keep a decent amount of $ spare in an offset a/c incase of trouble.Which super fund were you with if you don't mind sharing?
Wouldn't matter what super you are with. Anytime you have income protection inside super, you need to go through 2 layers of claims.
With the insurance company - This will be dealing directly with the insurance company to determine that you are temporarily incapacitated. There are such things as waiting periods for most income protection so you have to be out of action maybe 30 days, 60 days, or 90 days. Sometimes it can go for 180 days! Not only that, you need your GP to certify that you are temporarily incapacitated. After that, they will pay.
After the insurance company pays, you will need to meet the superannuation condition of release temporarily incapacitated. Now, you need to jump through all those hoops with superannuation funds to prove that you are temporarily incapacitated.
That's why it is a pain to have income protection inside super. I rather have it outside and deal with just one company than two companies.
you will need to meet the superannuation condition of release temporarily incapacitated.
In every fund I've been at, the definition for the fund is the same as the insurer's, so meeting the actual condition of release of the fund is rarely (or never) a problem.
It definitely does take longer with the additional step for Trustee approval. The good thing is, the claims process can get started before the waiting period is up and payments can begin at the end of the waiting period (plus a month - because they pay in arrears).
The benefits of having cover in Super is often the cheaper premiums due to it being a "group" (vs individual retail) policy and perhaps a higher automatic acceptance limit.
Thank you for the explanation
Definitely look into the terms.
I always suggest getting own occupation income protection, not any occupation. Any occupation means as long as you can do literally anything they don't have to pay. Hence they could say go work at Maccas.
Noble Oak does a decent job.
Can you have income protection through your super AND through a company outside of your super?
You can, but even if you have multiple policies, the highest total benefit you can get paid out is 75%+super - so there's no point having and paying premiums on policies totaling more than that. It's best to have one policy that covers the maximum amount (and cancel the rest of them) so that when it comes time to make a claim, you're dealing with a single insurer rather than multiple.
read the fine print… then re-read it… then get someone else to read it… then find out it isnt all its cracked up to be.
We currently have IPI through our super but if it's structured this way, we cannot claim it through our tax expenses.
You're also not paying the premiums out of your pocket - it comes out of your super balance and the tax deduction for the premium goes back into your account. The premiums are likely to be cheaper in your superfund because it's likely a 'group' policy (that comes with a group discount vs individual retail policy) and possibly higher auto acceptance limit (depending on your income, could be less underwrting).
Outside super you pay with after tax income then claim the deduction. Inside super you pay with pre tax income so nothing to claim. Same thing.
I have never had to claim but most Super funds just use third party insurers so going direct to the third party or going through you super fund would seem the same to me. I have looked and it is the same PDS through my super fund or direct.
Made a claim on mine through super. It was relatively easy (given that dealing with any insurance matter is never simple) with a few hoops to jump through. Over the two years I received 75% and had to have my GP periodically confirm my temporary disability. Once they sent me to an independent specialist. Given that my employer deals with all the premiums etc, it went pretty well. In my case, 2 years wasn't enough and I ended up on leave without pay for another 12 months.
its a lot cheaper via super. 3rd party we spend $2k a year vs $500 if through super. thinking of switching to super soon.
You need to make sure the policies are comparable. Generally, you will get a far greater level of flexibility in outside super arrangements (and therefore higher costs) than you will get from the inside super policies.
super has higher payout actually
Source?
Financial Planners give this insurance advice. If you are worried about tax deduction for the IP cost, you could consider making tax deductible super contributions to cover the cost…eg if it costs say $100 per month for IP then just contribute $1,200 pa to cover the cost. IP outside super is generally more able to be tailored for your exact needs.
IP is not worth the outlay cost.. its also very hard to make a claim should you lose your job.. better off savig the money & putting it into a high interest saving account & using that as your emergency account/ self- made iP.
IP is not there to protect against you losing your job. It's there to replace your income should you become incapacitated and unable to work.
I would have said that until I needed it. Luckily it was within my super. Took a while to initially get it started, but that was because I used my specialist to fill out the forms. Then there was dealing with both employer and insurance company. The employer was suppose to rehabilitate me or find alternative positions. They did nothing. Ended up TPD with TPD payout before 2 years was up. I only wish I had upped that cover. Never in a million years did I think I would need it. That payout hadn't covered my equipment needs.
IP (along with the various other forms of life insurance) is the area of financial services above all others where I suggest to people to see an appropriate "insurance specialist" financial planner/insurance broker. There is simply a greater level of complexity on these matters than almost all other areas of financial services and it will certainly pay to have a expert providing guidance here, rather than trying to do it yourself.
During my 5 years of self employment, I looked at IP insurance a number of times. The policies that I considered would not provide ANY payment at all for the first 30 days of illness & then pay 75% of income. I couldn't see value for money in these policies. I opted to self insure. Many business owners manage to run their businesses whilst unwell, in circumstances where an employee would ring in sick.
The policies that I considered would not provide ANY payment at all for the first 30 days of illness & then pay 75% of income.
The waiting period starts from 30 days because they want people to use up all their regular sick and annual leave before claiming. Basically, the shorter the waiting period, the more claims they will get (the increase will become exponential as the number of days drop). Imagine how many claims they would have if they had five-days as an option for the waiting period
I couldn't see value for money in these policies.
It's like any other insurance… it's 'useless' and 'a waste of money', until you actually need it. Mine had a 90 day waiting period and I had over $100K paid out to me in a year or so that I had to take off. It obviously made a huge difference to me and I'm glad I had it.
AIA
Whatever you do, for your sake, avoid resolution life" like the plague.
I wont go on and on about my own experiences ( unless for some unkonown reason you would like me to) other than to say they are the most dishonest and incompetent company i have ever dealt with.
Take a look at the reviews and their ratings by independent agencies.
The last time I looked they were repeatedly the worst rated company.It is difficult to sift through all the info online and work out what is right, what is wrong, and what applies to you own situation. Then you have to work out what product suits as they are all different in their own way.
Getting advice from a licenced adviser I believe is the best way to make sure what you do is suitable to you.
What’s wrong with that?? You may be better off this way as it won’t impact cash flow.
Where you located Op? You can speak to any reputable fin planner to assist