Features and Benefits
Salary Continuance Insurance
Harmers Workplace Lawyers recently undertook a review of its existing Group Salary Continuance policy with AMP. This is similar to the review undertaken with Superannuation.
As a result the decision was made to upgrade the existing policy with AMP. This cover is available to all permanent staff including permanent part timers regularly working 15 hours or more per week.
The importance of Income Protection Insurance (or Salary Continuance)
The ability to earn an income is among a person’s greatest assets. Income pays for your assets such as your house, mortgage, education costs as well as helping to fund your living expenses. Income Protection Insurance will replace income lost as a result of you being unable to work due to injury or illness, thereby ensuring that you and your family are able to maintain your standard of living.
Key Benefits
- The Firm will pay the premiums on your behalf.
- You have automatic cover which means there is no need for medical underwriting under the policy if you have a base salary of $71,006 pa or less. This is a wonderful benefit which you could not obtain if you applied for this type of insurance on your own.
AMP Product Features
- You now have cover for 75% of your base salary plus 9.5% of base salary paid as superannuation contributions, up to a maximum benefit payment of $20,000 per month or $240,000 annually. This equates to a base salary of $284,024.
- Automatic Acceptance Limit (AAL) of $5,000 per month, or $60,000 per annum. As the benefit cover is for 75% of salary plus 9.5% superannuation, this means that employees earning a base salary of $71,006 pa or less will not have to be underwritten and will be automatically covered when they join the firm. Employees earning more than a base salary of $71,006 pa will need to complete health declarations as their benefit payment will be over the AAL.
- Definition: The definition that will ultimately determine whether a claim is paid is the definition of Total disablement. “An insured person is totally disabled if they suffer an illness or injury while in the active service of the employer and as a result they are:
– Unable to do their usual occupation because they are ill or injured, and
– Under the ongoing care of a doctor, and
– Not doing any remunerative work.
When AMP assesses the insured person’s ability to do their usual occupation, the assessment is based on their capacity to carry out any one duty or combination of duties that are critical to the proper performance of their usual occupation.” - The policy has a waiting period of 90 days. The waiting period starts on the date you are totally disabled and ends at the completion of the period of 90 days. In a practical sense, the medical assessment is only done at the end of the waiting period of 90 days while in most cases the first benefit payment is received after a total of 120 days from the date of total disablement.
- The maximum benefit payment period is to age 65. The benefit payment period is the length of time that the income replacement benefit will be paid while you are disabled.
- Maximum Benefit Level – $20,000 pm or base salary equivalent of $284,024 pa
Practical examples:
| Base Salary | Benefit Payment | Annually (at 84.5% of base salary) |
Per Month |
|---|---|---|---|
| $60,000 | 75% of salary plus 9.5% superannuation (max benefit payment $240,000 pa) | $50,700 | $3,750 plus 9.5% superannuation ie $475 Total $4,225 per month |
| $90,000 | 75% of salary plus 9.5% superannuation (max benefit payment $240,000 pa) | $76,050 | $5,625 plus 9.5% superannuation ie $712.50 per month Total $6,337.50 per month |
| $120,000 | 75% of salary plus 9.5% superannuation (max benefit payment $240,000 pa) | $101,800 | $7,500 plus 9.5% superannuation ie $950 per month Total $8,450 per month |
Note: A base salary of $284,024 pa is the upper limit for the maximum benefit of $20,000 per month.
If you have any further queries, please contact Horizon Wealth Management by phone on 02 9392 8700 or by email at info@horizonwealth.com.au.