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Income Protection Case Studies


Income Protection Case study 1
Income Protection Case study 2
Income Protection Case study 3


Income Protection Case study 1

Gloria is a single mother of 2 children who does not have any income protection insurance since she felt that income protection plans are unnecessary. Gloria works as a sales representative for a company and earns $35,000 annually and her salary package includes superannuation benefits.  A few months ago, Gloria was injured in a car accident due to which she was temporarily unemployed for 3 months. Gloria did not have sufficient paid leave hence she was forced to manage her finances on her own till she could resume work again.

If Gloria had opted for income protection insurance then she would have got the following benefits after filing a claim:

Income protection plans are designed to help people get financial support when they are in crisis and cannot earn a steady income due to problems such as injury or illness. These plans ensure that people in Australia do not have to suffer when they are unable to support their families. If Gloria had opted for income protection insurance plans then she could have enjoyed the benefits mentioned above and her children would not have had to suffer when she could not provide for them temporarily.


Income Protection Case study 2

John works as a manager in an establishment and earns $55,000 annually. He was offered income protection insurance by a leading insurer however he decided to opt for a basic plan in order to save money. John pays $7 a week towards premiums and in return he is offered a few benefits such as monthly compensation payments, a few additional benefits and a 2 year benefit period.

A few months ago John was involved in a motorbike accident that caused him to suffer serious injuries. Due to this accident, John was unable to work for 1 year. Since John had income protection insurance he was given a monthly compensation payment after he filed a claim however, since the basic plan he had selected was an indemnity contract, he did not receive maximum compensation payment. Instead he received compensation payments that totalled up to 40% of his annual pre-tax salary amount.
If John had opted for a better policy that cost an additional $5 a week then he could have enjoyed maximum benefits. Since good policies offer an agreed value contract and not an indemnity contract, John could have got maximum compensation benefits that totalled up to 75% of his pre-tax salary. John could have also enjoyed a disability rehabilitation benefit and various other perks. There is no doubt that basic income protection insurance policies offer some benefits and having a basic policy is better than not having an income protection policy, however people who have dependants should consider their family’s requirements as well when they opt for income protection plans.


Income Protection Case study 3

Phil is a self employed individual who earns $75,000 annually. Phil is a father of 2 children and Phil’s wife does not work, so she can be considered as a dependant in this scenario. Phil has a comprehensive income protection policy that offers maximum benefits and he paid $14 a week towards income insurance. In the year 2011 Phil had an accident while he was walking on the road, due to which he injured his spine. This accident left Phil temporarily disabled and in a wheelchair for 2 years.

Due to the accident and injury, Phil could not manage his business which caused him to suffer a financial loss. However, since Phil had a comprehensive insurance policy that protected his income, the selected insurer ensured that Phil got monthly compensation payments after he filed a claim.

Phil not only received maximum compensation payments of 70% of his total pre tax income but he also received additional benefits such as disability rehabilitation compensation. These benefits allowed him to pay his bills, mortgages and run his household while he could not work. Since the comprehensive policy offered a shorter waiting period of 4 weeks, Phil did not have to wait for a very long time to receive the first monthly compensation payment from the insurer. In addition, since the benefit period of the policy was 5 years, Phil received compensation for majority of the time he was unable to work. By purchasing a comprehensive income protection insurance policy, Phil ensured that he and his family did not have to suffer when he was temporarily unable to work due to the accident.


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