Income Protection Insurance is a safety net that most Australian families should have. Unfortunately many Australians are under-insured, and with this comes a general lack of knowledge and understanding regarding Australian policies. Today we look at some misunderstandings around income cover policies.

Only men need income insurance
Women often make major contributions to reducing the outgoings of a family, and working to help maintain the incomings. Career women whether single, married, or with children should seriously consider income cover. It provides up to 75% of your income should you suffer a sickness or accident.

Income protection protects against redundancy
Some people become confused about income cover, thinking it can protect against redundancy. However this is a myth, as it does not protect against redundancy or involuntary unemployment.

I have enough income insurance in my superannuation policy
The default amount of cover in a superannuation policy is usually set far too low to support standard living expenses. You need to do a proper calculation for your potential benefit needs before you know whether you have enough cover provided through your super fund. If you don't have enough cover, top up your level of cover outside of super.

My children are grown up, I don't need income protection
Income cover often plays a pivotal role in supporting your living expenses if you suffer a sickness or accident. It means you don't have to rely on anyone else financially. Even if your kids have moved out, you still need to be able to look after yourself!

I smoked when I was a teenager, my income protection rates will be too high to bother with
This myth has prevented many people getting adequate coverage. In fact, if you haven't used nicotine for more than 12 months, you'll usually get the same rates as non-smokers. Speak to your financial adviser for details.

Young people don't need income insurance
The need for cover is about responsibilities (usually children or a spouse) and debts, and paying for your own living expenses, not about age. If you lost your income, would you have eough savings to pay for ongoing living expenses? If not, then you need income cover.

Income protection insurance companies always find some way to not pay out
In Australia, the insurance industry is incredibly tightly regulated. If you make sure you're familiar with, and comply with, the terms of your policy (which are provided in plain language), there is almost no chance that your claim will not be paid.

Income protection insurance premiums are tax deductible
Yes, income protection insurance premiums are tax deductible! Pay your premiums before June 30 to make a full claim and take advantage of this benefit.