Do you feel insecure because you lack financial security? If your answer is yes, then the solution to your problem could be income protection insurance.
But the major problem is that when we look at the records of 2017 and 2018, we notice that the insurance rate rose by 30%.
What most people want is to keep their insurance rates affordable. The good news is that it is possible to reduce the income protection premium. You might be wondering how so we will give you all the answers here.
However, the first thing you need to do is compare income protection insurance. For that, you should make it a point to surf iSelect so that you get a clear idea about the insurance plans available.
Things you need to remember when getting income protection insurance:
Claiming the premium as a deduction
The most important thing is that you should have sufficient knowledge about income protection insurance when you apply for it. Let us assume that you personally pay the income protection premium. If your answer is yes, then make sure that you claim your premium as the deduction at tax time.
Depending upon your marginal tax rate and your income, you could receive back half of the premium as the refund.
Extending the waiting period
If you want to receive a major reduction in income protection premiums, then you have to increase the waiting time on your policy. What you need to keep in mind is that if you go for a short waiting period, it comes at a price.
If you increase the waiting time by 14 to 30 days, then you can reduce the income protection premium by 40%. If you increase the waiting time to about 14 to 30 days, then you can even reduce the premium by 30%.
Consider the worth of the escalation rate
There are times when insurers charge about 30% extra for including the claim escalation benefit. This increases the monthly benefit by the inflation rate each year, and this helps to maintain the real value.
Remember, the benefit depends upon the circumstances. If you are 35 years old, and the policy has a benefit period of about 65 years, then the claim escalation benefit is useful in this situation.
The reason for this is that if you suffer a long-term injury, and you need to claim over 30 years, then your benefit will shrink slowly in the real-terms without indexation. If the benefit period is just about two to five years, then the indexation will be less critical in this situation.
What you need to keep in mind is that some policies include the desired features, while some policies tend to cost extra for these features. You should look for automatic inclusions like guaranteed non-cancellable/renewable and guaranteed future insurability.