What are some ways you can protect your income without having to feel like you’re depriving one of your children of a good education just to have it?
I thought I’d list some of the options that are available to help reduce your income protection premiums if you’re considering this cover for the first time or if your household expenses are creeping higher and you need to cut back.
These are in no particular order of preference. Remember to check your policy to know exactly what you currently have.
1 – Put Income Protection in Super. This will immediately improve your take home income but comes at the expense of impacting your future retirement benefit. Please note also that some Super Funds provide very limited income protection policies.
2- Adjust your Waiting Period. If you’re generally good with managing your cash flow or have access to savings or a strong redraw facility in your mortgage, a longer waiting period may be just the ticket you need to reduce your monthly expenses. Conversely, a shorter waiting period will mean you start getting paid sooner if you go on claim.
3- Reduced Benefit Amount. Just because many insurers offer a 75% of salary maximum plus a Super continuation option, doesnt mean you have to take the whole amount. For example if your monthly benefit is currently $8,000 but your family only have expenses of $4,000 per month, you could always reduce the benefit amount to bring your premium down.
4- Reduced Benefit Period. Personally, this is my least favourite option but it’s better to have some cover than none. Most advisers I know recommend a benefit period to age 65 where available as this protects you against ending up on a Government Disability allowance if you wind up unable to return to the workforce for a long time. However benefit periods as low as 2 years are available as are 5, 10 and 15 years depending on such factors as your insurer and your occupation.
5 – Improve your health. This is my favourite of all because not only does it lower the costs of owning insurance but also means you’re more likely to grow old with your family.
The two biggest impacts I see on insurance premiums for clients is smoking and obesity. If you’ve become a non-smoker for 12 months or more ask your adviser to request a reduction in premiums from your insurer. This single aspect alone will halve your monthly bill.
Similarly, if you’ve been on a diet and excercise regime for a while and have achieved some great results why not have it reflected in your wallet.
As you can see there are many ways to discuss with your adviser how your Income protection premium is charged. Cancelling your cover, your should not be one of them. You never know when you’re going to need it the most.