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Q Super Income Protection Expensive

Posted by Neal Durling on 21 October 2014

Inspiration for my blog this week came from a Specialist working for Queensland Health who is not particularly keen on insurance and happy to rely on the Income Protection cover provided through his Q Super fund.


Whilst this might seem sensible providing you can live on a taxable income of 75% of your base pay, have no pre-existing medical conditions which could cause problems at claim time and understand your benefit ceases after 2 years there were other areas to consider for this particular client.


My client had accumulated significant sick leave which you might think was a positive. Unfortunately, as his Q Super policy requires that accumulated sick leave is exhausted prior to the 14 day wait period, his Q Health income protection policy effectively became a 90 day wait policy. A quick comparison quote showed a 90 day wait / 2 year benefit period policy without the limitations of Q Super was significantly cheaper!


This got me to thinking. If you are a specialist working for Q health earning in excess of $300kpa and paying 30% contributions tax on your concessional contributions what is the true cost of your income protection through Q Super, given premiums would be deductible to you outside of super? You need to divide the Q Super premium by 0.7 to provide the comparison thereby turning a $1,000 premium outside of super into a $1,428 premium inside super.


My client was also thinking about moving into private practice shortly so of course his Q Super Income Protection cover would cease then anyway. A real risk given one’s health can change at any time making medical underwriting more difficult but that’s another story.

Author: Neal Durling
Tags: News Tax

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The information on this site is of a general nature. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.

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