How much Income Protection insurance do I need?
With NobleOak Income Protection Cover you can choose cover of up to 75% of your before-tax income, up to a maximum of $25,000/month.
You will need to have enough cover to manage your living costs if you were unable to work. Do you have debts such as a mortgage or a car loan? Do you have dependents? Can you supplement with savings and manage on 50% or 60% of your income, or should you opt for the 75% maximum cover?
For example, Roger is a 32-year-old nurse with an annual salary of $80,000 and has just bought his first home. Now that he is responsible for a mortgage, he decides it’s time to protect himself in case of serious illness or injury. His current income enables him to take out Income Protection Insurance to a maximum benefit value of $5,000/month.
Roger has no dependents and no other debt besides his mortgage. He calculates that he could manage his mortgage and living expenses on less than 75% of his salary, particularly if he was sick or injured, as he would also be saving money on his usual sporting and social activities. He could also rent out the second bedroom in his house if necessary. Roger decides to take out cover for a benefit of $4000/month with a 90-day waiting period, knowing that if his circumstances change in the future and he gets a pay-rise or acquires more financial responsibilities/dependents, he will be able to apply to increase his cover to suit his needs.
At NobleOak, you can also increase your monthly benefit by a further 10% of your income to allow for superannuation contributions that you or your employer would have paid had you continued working. This extra 10% should then be paid into a complying superannuation fund.