Indemnity or Agreed Cover?
With income protection you can take out an indemnity or an agreed value policy
Indemnity Policy
This is where financial evidence is not required at the application stage, but will be needed in the event of a claim. However if your income reduces in the future the policy will only pay 75% of your lower income level. Indemnity cover does have lower premiums than agreed value. For salary based wage earners indemnity cover is an attractive lower cost form of cover.
Agreed Value Policy
This is where you prove your income at the application stage, and the insurance company agreed to the monthly benefit. This means that in the future, regardless of if your income reduces, you will be paid the agreed monthly benefit. This also means that in the event of a claim financial evidence will not need to be produced.
Note
Agreed value policy will have premiums approximately 20% higher than indemnity cover. However for people with fluctuating incomes agreed value policy should be established.
Other Useful Pages:
Income Protection Premiums
Income Protection Premiums (clerical occupation):
These premiums are
for various ages, both for Males and Females. The following premiums are based
on an indemnity policy for someone with an annual income of $50,000 in a
clerical occupation ($3,125 monthly benefit) indemnity value. This is with a 30
day waiting period and a benefit to age 65:
|
Age |
Male |
Female |
|
30 |
$40 |
$55 |
|
35 |
$50 |
$70 |
|
40 |
$70 |
$95 |
|
45 |
$95 |
$130 |
|
50 |
$125 |
$185 |
|
55 |
$180 |
$240 |
Income Protection Premiums (blue collar occupation):
These premiums are
for various ages, both for Males and Females. The following premiums are based
on an indemnity policy for someone with an annual income of $50,000 in a skilled
blue collar occupation ($3,125 monthly benefit) agreed value. This is with a 30
day waiting period and a benefit of 5 years:
|
Age |
Male |
Female |
|
30 |
$60 |
$80 |
|
35 |
$70 |
$100 |
|
40 |
$90 |
$130 |
|
45 |
$120 |
$170 |
|
50 |
$175 |
$260 |
|
55 |
$320 |
$420 |
Income Protection Premiums (high income earners):
These premiums are
for various ages, both for Males and Females. The following premiums are based
on an indemnity policy for someone with an annual income of $150,000 in a white
collar occupation ($9,375 monthly benefit) indemnity value. This is with a 30
day waiting period and a benefit of 5 years:
|
Age |
Male |
Female |
|
30 |
$95 |
$120 |
|
35 |
$120 |
$150 |
|
40 |
$150 |
$195 |
|
45 |
$210 |
$270 |
|
50 |
$310 |
$420 |
|
55 |
$450 |
$600 |
* remember that income protection premiums are 100% tax deductible and the above approximate premiums do not take any tax deduction into consideration.