Ever thought about a scenario in which you
are unable to bring the same amount of money earned at home? Did it ever cross
your mind in a distant future when you are suddenly getting less salary than
you used to or even nothing for a long time?
Income Protection is an insurance policy
that covers loss of earnings due to an injury or illness. It works by replacing
your lost pay packet while at the same time defending you and your family
against temporary and long-term financial issues.
How Much Does Income Protection Insurance Pay?
The way Income Protection Insurance works
is that it serves as a monthly benefit claim that pays around 75% of your total
income if you can’t report to work due to illness or injury. Also, it is
usually tax deductible and is planned to cover living costs such as acquiring
basic needs like food, paying bills, and resumption of a quality standard of
Is Income Protection Insurance Even Necessary?
Most families get by through a
breadwinner’s salary. And quite a few can survive without relying much on the
primary jobholder’s wage or salary. However, income Protection Insurance is
necessary if you feel you need to maintain individual financial independence in
the event of illness or injury, as a support for your family, if you are still
paying off a mortgage. It is also a good investment if you are a self-employed
worker or a small business owner. Income Protection Insurance covers the
essential part of your family’s finances, even in illness, sickness, or injury.
Is Income Protection Insurance Expensive?
Like life insurance, income protection
insurance premiums can be custom tailored to fit any budget. It just boils down
to accurately defining how much compensation is necessary to avail of income
protection insurance. This is important since most employers stop paying for
income protection insurance once the employee leaves the company or is made
The income protection insurance policy
required depends on the individual’s capacity to pay off its premiums. However,
insurance companies have distinct insurance claims capped at certain amounts.
They will ensure that you won’t ever exceed those limits based on past earnings
before you cannot work. As a general rule, be mindful of not over-insuring your
Factors Affecting The Cost Of Income Protection Insurance
Insurance is affected by a person’s age, job, smoker status, and term of
coverage. The benefit amount, benefit payment period, and deferred period
increase the amount of premium paid per month. Lastly, the medical history of
the insured individual will play a critical role in the amount of monthly
premium necessary for the income protection insurance policy.
The Risk Of Not Having An Income Protection Insurance
Living without income protection insurance
predisposes you to the risk of being unable to pay off and keep up with the
cost of daily living in the event of income loss due to illness or injury.
However, this occurrence will be dependent upon a person’s circumstances, such
as available financial commitments and the number of dependents under your
name. The longer you are unable to work without income protection insurance,
the more significant the economic impact will befall you and your family in
terms of financial needs.
Having income protection insurance is a
reasonable precaution if you have second doubts about your ability to be
constantly healthy and able to work at all times. In addition, income
protection insurance helps you and your family when you cannot work for any
reason until you can do so based on the current stipulated terms and conditions
of the plan selected.