In an insurance first, life risk giant Aviva Australia has bridged a gap in income protection cover for high net worth Australians.
High income earners were often unable to get income protection for the full amount of their annual salary, Aviva wealth protection products general manager Natalie Eckersall said.
Reacting to feedback from financial advisers working at private banks, Aviva has bolted on a debt replacement option to its Income Protection Gold product.
"Usually in the first 12 months of injury or illness, lifestyle adjustments have to be made to meet personal debt commitments," Eckersall said.
"In the case of Australians who earn high incomes, this adjustment is often more significant as their committed living expenses are generally much higher than the average Australian."
The wealthy often have greater personal debt commitments, including personal equity or overdrafts, residential and commercial property investment-linked loans, and private school fees.
For additional premium, the debt replacement option adds extra benefit for the first 12 months of an income protection claim.
For example, a 45-year-old with an annual salary of $500,000 would receive an income payout of $23,960.
By adding a $10,000 debt replacement option, the monthly benefit increases by 37 per cent to $32,710.
Without the extra insurance payout, high earners may be forced to sell off assets and seriously curtail their lifestyle to remain solvent.
Thereafter the monthly benefit would be $22,710. The total premium price would increase by about 19 per cent.
The option is available to those who earn at least $295,000 a year or have $1 million of death cover with Aviva.
