Myths about Income Protection Cover
Myth 1: “I can cope with a little lost income”
Our Provider's claims records show that 48% of claimants were off work for an average of five months. That’s a long time to be without an income especially when there are bills and mortgages to be paid. And then there are the less obvious costs to be considered such as childcare and home and work modifications to aid recovery.
Myth 2: “But I’m young, fit and healthy”
While this may be a commonly held belief the fact is 48% of Our Provider's Income Protection claimants are under 50 years of age. Around $350,000 in claim payments were made monthly in 2008, which is $4.2 million for the year. That means around half of this amount was paid to people under 50 years of age.
Not only that but 5 out of every 10 males and 7 out of every 10 females aged 25 years are likely to become disabled due to an illness or accident before they turn 65. That means they will have to be off work for more than a month.1
Myth 3: “But ACC will pay if I have an accident”
No, this isn’t necessarily the case as 27% of Our Provider's new income protection claims were for accidents.
Myth 4: “l’m the breadwinner, so only I need income Protection”
Have you seen the cost of childcare lately? Add that along with housekeeping, food preparation, home accountant and school transportation. From that list alone you get an idea how much a spouse really contributes to the household budget. It is estimated a non -working spouse contributes at least the equivalent of a full time job.
The below costs illustrate how important the income from a non-working spouse is to your family's lifestyle.
The cost of replacing Mum or Dad adds up:
- Pre-school for child per fortnight $275
- Before/ after school care X 4 hours per day $400
- House cleaning X 8 hours per fortnight $120
- Cook X 5 nights per fortnight $75
- Total per fortnight $870
Income Protection Tip: topping up when they need it most
You can also elect the “Top Up” Option for Income Protection Cover. This option is available on both agreed and indemnity covers for an additional premium. By choosing this option they can opt for an extra one third of their payable claim amount when they’re off work due to an injury or illness. This will help see you through for the first three months until you are able to adjust your lifestyle and budget to the change in circumstances.
Top 10 claims paid on people aged under 50
| Sex |
Payments |
Loss Description |
Age |
| F |
$890,556 |
Multiple Sclerosis |
42 |
| M |
$768,974 |
Chronic Bilateral Orchalgia and Prostatitis |
45 |
| M |
$560,821 |
Plasmacytoma – Now Multiple Myeloma |
34 |
| M |
$424,916 |
Multiple Myeloma |
48 |
| M |
$296,811 |
Glomerulosclerosis |
41 |
| M |
$283,544 |
Farmer – Multiple Sclerosis |
42 |
| M |
$241,436 |
Chronic Lymphocatic Leukaemia |
45 |
| M |
$223,839 |
Depression and Anxiety |
37 |
| M |
$191,605 |
Cancer of Stomach |
46 |
| F |
$183,421 |
Multiple Sclerosis |
37 |
TOWER Health & Life Claims as at 31 Dec 2006
Other Facts:
• 24 years is the age of the youngest claimant 2
• The top claim payment to date is $953,726 3
• 13% of IP claims to Our Provider are for depression related illnesses 2
• 48% of claimants were off work for 5 months on average 3
• 74% of claimants were male 3
• Average age for claimant was 49 years 3
Source
1. Davies Financial & Actuarial 2001
2. TOWER Health & Life Claims as at 31 Dec 2006
3. TOWER Health & Life Claims 1 Jan – 31 Dec 2006
