There are many different types of insurance intended to help you when you are sick or injured including health insurance, disability insurance, or income protection insurance. Most people know what health and disability insurance are, and they can get it through their employers. However, income protection insurance is not standard.
Income protection insurance will provide income protection if you are unable to work due to an illness or injury. This money is to help you cover your expenses until you can get back to work. Many people are living paycheck-to-paycheck, which means being out of work for even a short period can put them drastically behind on their bills.
Income protection insurance will provide up to 75% of your annual income while you are out of work. Your policy will have a maximum benefit period, and the protection will cover until you can work again or until you have reached your policy's limit. The benefit period can range from two years up to 65 years based on your eligibility.
This type of protection is essential for people who are the sole income for their household, they have people that rely on them financially, they have monthly expenses that they need to cover, or they are self-employed. This insurance will prevent you from facing a financial crisis in addition to a health crisis.
Eligibility is based on age, income, and health, which may include pre-existing conditions. Your profession may also impact your ability, so it is essential to talk to an agent to determine your eligibility. When you apply, you can learn all your specific options based on your factors. Making sure the policy is set up to fit your needs will save on frustration when it is needed.
There are two types of policies. The first is the agreed value insurance, which provides a benefit amount based on your monthly income when you apply for the policy. The benefit amount does not change even if your income decreases before the illness or injury. The second type of policy is indemnity value insurance, which is based on your income prior to the accident or injury.
It is crucial to set up income protection as soon as you have financial obligations worth protecting. You can submit a claim to use your insurance after suffering an illness or injury that is going to cause you to miss work for an extended period. It is essential to clarify your with your agent when getting your policy, which type you are getting.
You may feel that you do not need income protection insurance because your employer offers health coverage and possibly long-term disability or other types of coverage. However, income protection will allow you to pay your non-medical bills while you are unable to work. There are no other types of insurance you can buy that will enable you to pay your rent, mortgage, or car payment.
Even if you think it is an unneeded expense, you will be happy you got it when you need it. Additionally, it doesn’t need to be a significant expense; you can find cheap income protection insurance with iSelect that will help match you with the insurance that fits your specific needs. They will save you time by doing the research for you.
If you are unsure about whether or not you need the extra protection, take a minute to add up your monthly expenses and figure out how long you will survive financially without a paycheck. This exercise will help you put things in perspective and allow you to see the benefit of additional protection. When you apply for the insurance, be sure to get enough coverage to cover your monthly expenses.