Income Protection Insurance: Advantages and Disadvantages
Most people understand what insurance entails. For this reason, people have their property covered, from cars to boats and houses to business premises. It is a good decision to have the items covered against various forms of risk. However, it is much better to have the ability to replace the items yourself. Income protection insurance is ideal in such situations especially if you suddenly cannot work due to illness, injury or death. It goes on to cover up to 75% of one’s monthly income.
What are the advantages?
Many people often wonder why it is necessary to have Income protection insurance in addition to their life insurance. While the life insurance benefits help those closest to you in covering various expenses in case of ones death, the income protection helps you earn a living if you happen to lose the ability to earn a living. You can keep on paying the necessary expenses and maintain your independence.
The workers compensation insurance offered by the employer is not enough to offer one full protection. Income protection adds to ones financial security through offering a cover for you that includes loss through non work related illness.
You can freely choose your benefit period with income protection insurance, even getting 75% of your previous salary until you are 70. When it comes to workers compensation, the claims process is complicated and the duration one receives payments is limited.
The policy covers sole traders and helps in safeguarding the financial future of the individual as well as that of the family. An individual can benefit from additional benefits through the advanced income protection policy as it covers disability rehabilitation benefits, death benefits and assistance for particular cosmetic or reconstructive procedures.
The repayment is consistent and tax free. The coverage payment flows in from ones injury to the time of recovery, retirement, end of contact or death. It makes it easier to cater for expenses like mortgage repayments, business maintenance costs, household expenses, credit card payments and medical costs.
And the Disadvantages?
To some, waiting for the insurance company to start making the payments is unsettling. Certain policies require one to wait for a period of 30-90 days for this to happen.
Income protection insurance does not cover those who are terminated from their jobs. The loss has to be through illness or accident. One has to get another cover called Income Payment Protection to serve the purpose.
The unemployed people cannot be covered. Smokers and women taking the policy pay higher premiums since they are more likely to fall ill – according to statistics.
Everyone needs to seriously consider taking income protection insurance. It is not only meant for those with risky jobs or hobbies. Accidents do happen to everyone and having financial security to turn to during such stressful and difficult situations makes it much easier to deal with. You have to be more prepared even though no one wants to imagine life taking such drastic turns. Finally, it is worth noting that different insurers offer income protection cover for various extents with the standard being 12-24 months. Longer benefit packages attract higher premiums but are better as the insurance lasts longer.