What if you’re ill with a serious disease tomorrow and cannot go to work? Will the sick leave pay or your savings be enough to take care of your living expenses? More importantly, will they be enough to take care of your medical bills? If not, then you need to take a look at some of the best income protection insurance.
Income protection insurance is a long-term insurance policy that is intended to help you out when you cannot work due to a serious illness or injury. This insurance policy has actually existed for a while now and was previously known as long-term disability insurance or permanent medical insurance.
Before you start considering getting income protection insurance, there are certain things that you need to keep in mind. It is not the same as critical-life insurance or short-term income protection insurance. Critical-life insurance pays out all the money at once, whereas short-term income protection covers only a few diseases over a short-period of time; you’ll be paid insurance for a maximum of two to five years depending on the policy.
With income protection insurance, you will be paid a percentage of your gross-salary every month. You can choose the percentage while opting for the policy, but most people just keep it at 50%. You can claim the insurance as many times as you want to, but the policy ends when you start resuming your work, retire or the policy period ends; whichever comes sooner. If you are unable to work and need to claim the insurance money, there is a certain waiting period involved. The waiting period depends on your sick leave and pay, and any other insurance cover.
There are different levels of income protection insurance policies. Some policies even cover disability to work due to psychological stress, while others cover only serious illnesses such as heart attack. The policy also covers the kind of work that you are not able to do; it may be your own occupation, a suited one or any occupation for that matter. You must read the policy carefully and understand it completely before choosing the appropriate one.
Since the income protection insurance covers a lot of illnesses, injuries and disabilities, it is very strict in its requirements and also very expensive when compared to life insurance. Your occupation, age, medical history and even your unhealthy habits such as smoking and drinking are taken into consideration before green-lighting the policy.
Premiums also play an important role in income protection insurance plans. They usually start low if you are young, and then increase over time. You can cut the premiums you pay by reducing the term of the policy or opting for a longer sickness gap before you make the claim. However, this also means that you will be getting fewer benefits under the income protection insurance.
An ‘own occupation’ policy is better to opt than a ‘any occupation’ policy as the chances of making a successful claim are more with own occupation. There are only a few cases wherein you can successfully claim that you are unable to do any kind of paid work.
Income protection insurance is a great way to secure your future against any untoward incidents, but the choice of opting for it depends on your circumstances. Consider the income protection advice given above and always take time to understand the different policies before opting for them.
Income Protection Advisor 