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If you are planning to buy income protection insurance, then there are certain aspects that you need to consider. There are some do’s and dont’s that will help you to make an informed choice. The amount of premiums you will have to pay will depend largely on the type of income protection insurance you opt for. Here are some tips that will help you make the right choice:

Insurance type: There are two main types of income protection insurance available in Australia and they include indemnity value and agreed value.

a)      Indemnity value policy: If you opt for indemnity value policy, then you will be required to pay 75% of your income as monthly premiums prior to disability. Income prior to disability is also known as pre-disability income and is defined differently by each insurer. It is normally measured as the income earned by you over the best 12 months or the last 12 months. The good thing about indemnity policy is that it is the cheapest income protection insurance. An important thing to remember is that during the time of claim, financial checks will be required and this could lead to reduced payout of benefits.

b)      Agreed value policy: If you opt for agreed value policy then you can be rest assured that you will get the full benefit amount and is irrespective of your income during the time of claim or 12 months prior to it. This type of income protection insurance is expensive as the insurer assumes the risk of reduction in income of the insured post issuance of the policy.

Coverage:  One of the most important aspects to consider while buying income protection insurance or just about any insurance policy is the coverage.  You need to first identify the coverage you require or want. Don’t just go ahead and blindly invest in a policy just because your friend, relative, or colleagues referred it. You need to understand that your need is different from the needs of your friend, relative, or colleagues.

Premiums/Price: Don’t go for the cheapest income protection insurance policy cover in the market. This is one of the most common mistakes and may cost you dearly during a claim. Cheaper insurance always looks attractive and paying a lower premium might lower your current financial burden.   But the truth is that you need to look into the future and ask: will this coverage be enough? You need to keep in mind the rising costs or inflation. You need to also take into consideration what would your salary be 5 years from now.  If all these factors are not taken into account then the future outcome or post disability outcome can be financially devastating.

Policy Quotes: This one is a must! Ask your friends or colleagues about the income protection policies they have and then conduct your own research. Call up the top insurance companies in Australia and find out what they are offering. Get a quote! Income protection insurance quotes are available for free and you can get it directly from the insurance company or through an agent. These days most insurance providers offer the facility of getting an insurance quote directly from their website. Some of the criteria that you should use while comparing policy covers are length and type of coverage, premiums and deductions, duration and length of benefits, and taxable benefits.

Clauses: You need to find out more information about the various clauses that are applicable in your policy. Try to find out the medical conditions that are applicable under disability for a claim. At the same time, identify whether your needs are long-term or short-term.

Providers: Last but not the least; just because an insurance provider is offering a cheap quote doesn’t mean you should buy your policy from them. Research is extremely important when it comes to the insurer as well. Study the company and talk to other policy holders of that company if possible. Try and find out how the company stands in the market and what is their reputation? Never deal with unethical companies.

article by Income Protection Insurance AU : The fastest way to get Australian income protection quote online