15 Jan 2010 10:01 PM
Here in Australia, income protection insurance (policy that pays out a regular sum after a period of income loss due to illness or injury) can be claimed as a full taxable deduction here - therefore lowering your gross taxable income and therefore lowering your tax bill! Therefore, many people do buy this type of cover. If you have enough funds to pay for 6 months of no income, and expect this to continue to be the case, you can set a deferred period on the insurance of 6 months (the policy only pays out after 6 months of you being unable to work) this would make the policy much, much cheaper so you may want to look into this.
Life insurance is generally not required here by lenders, but is absolutely essential to ensure your family do not lose the roof over their head in the event if you or your parter died. If you have kids, and you rely on your partner to look after them whilst you work, consider a joint life, first death policy, as this would pay a sum of money to the surviving partner, and is cheaper than 2 x single life plans. Depending on affordibility, as a minimum, make sure you have at least a policy sum assured and term (number of years) the same as the mortgage. If you can afford more, then its advisable to have more, but as to how much - well you should get some professional advice there, every situation is different. Life insurance is not tax deductable as a stand alone, but some people add it into their super and this apparantly is a tax efficient way of doing things.
Hope this helps a bit!|