Home 
Education Centre How can income protection help me in the time of need?
Education Centre How can income protection help me in the time of need? | How can income protection help me in the time of need? |
|
There may be times when owing to a sickness or injury one is not able to report to work. In such a scenario it is very much possible that he loses a part of his salary for the days he was absent for work.
In order to avoid such a situation and ensure that you receive your entire salary even if you haven’t been able to work, one should go for Income Protection Insurance.
What is Income Protection? Most of the times professionals go for Life Policy so that if they lose their life in any eventuality, a set amount is paid to the dependents so that the blow to them is softened and they do not face financial problems. However, it is equally important to take care of the cost of “living” while you are down with sickness or Injury. Even while you are not able to earn, there must be a way out which sees you thru’ your healing process and enables you to pay your bills, take care of your investments, provide for your family and dependents. Thus Income Protection Insurance is a type of Insurance which provides you with an alternate Income Stream when you are not able to work. Income protection covers your ability to earn even while you are unable to work. The income you earn from your Income Protection scheme pays a regular tax-free monthly income and helps you maintain the same financial position you enjoyed before incurring injury or falling sick. Types of Income Protection Insurance? Income Protection Insurance can either be Long Term or Short Term. Long Term: This type of protection takes care of you between the time your employer stops paying you sick leave and when you collect your pension. Short Term: This type of policy is good enough when you able to return back to work within 12 months from the date of injury or sickness. This takes care of your “living” expenses along with your bills, credit card payments, bank loan payment and so on. How much Income Protection will pay you? Income protection insurance schemes generally cover 75% of your salary. That is if you earn $5000 per month, you can claim upto $3750 for the month you did not go to work. How much Premium will I pay? The premium amount for Income Protection Insurance will depend upon: Your age (the cover may decrease or your premium may increase as you grow older) Your current health status (Premium may increase or the cover may decrease if you are not maintaining good health at the time of starting the Income Protection Policy) Nature of your job (Premium will differ in case of a manual labour and an office goer) Whether you are a smoker or not (Smoking may make your premium shoot up) What to be aware of? You need to know what exactly you are getting in return for your premium. The following check list will help you choose a better deal. 1. Some of the Income Protection policies will pay you if owing to your injury or sickness you cannot perform normal occupation. While other policies pay you if you cannot perform jobs suited to your education, skills or experience. 2. It might happen that your Insurance company reassess your health at the time of yearly renewal and may choose to increase your premium of simply refuse future cover. You must therefore be cautious in your choice and go for a policy which is non-cancelable. 3. Don’t forget to check the waiting period (the time you will have to wait to get your payments. Like 30, 60 or 90 days) and the benefit period (for how long you will get the payments). 4. Insurance companies reserve the right to reduce the total payout to you in case you have any other cover. For example, sick pay from your employer. So check out how much will you actually get from your company in the light of what you will be getting from your employer. The more the better. 5. Your premiums must keep up with inflation. |
| < Prev | Next > |
|---|
Part of the Green Tea Media Network