Injury, illness, accidents are few factors, occurrence of which cannot be predicted. It generally makes you disable time and leads to loss of income or job. Therefore, Income Protection is the sheer requirement of time. It provides lump sum amount to the insurer in case, he is incapable to work due to any disease or injury.
This policy is quite famous in countries like Australia, USA, UK, and Ireland. It pays out 75% of the current income of the policyholder, which is termed as “policy cover”. Different Income protection insurance plans are available for different clients as in Income protection plan for tradesmen, self-employed, doctor’s insurance plan and so on. Each policy is designed keeping the specific profession in mind. For an example, doctor’s insurance is especially designed for health professionals. Main goal of such plan is to meet the requirement of client’s.
Why Income Protection is Important
Various health risks have significantly increased the risk or insecurity to loss job and without a job one cannot bear the household, medical and other expenses. Hence, to ensure the financial stability and meet all financial obligations income protection is quite important. It is the most needed insurance policy. Unlike, other insurance policies income protection is out of taxation, which offers additional economical benefits to the policyholder. It insures the current income of the policyholder, which is paid off to him in difficult circumstances like critical health issue that makes a person incapacitated. Coverage amount is generally used for paying medical bills, utility bills, mortgage payment, debt and various other household expenses like home rent, grocery, electricity and credit card bills and much more. Recovering from injury or illness becomes more faster if you are financially stabilized and stress free. Therefore, it is intelligent to get income protection coverage to stay secure.
How Does Income Protection Plan Work
Any sort of temporary disability results in work loss. However, large number of employers offers sick payment but it is limited in amount and time period. In case sufferer is the only bread earner of the family, then it becomes more difficult for the entire family to survive. Having a policy that guarantees continued income even in such cases is safe.
Income protection insurance is one of the best choices for the same. It pays the coverage amount on monthly basis to the policyholder. To claim for this coverage insurer needs to get his income verified. After 7-15 days of completion of verification, coverage is paid. Time to receive the payment totally depends on the type of policy. It is generally paid for 6 months and in some cases lasts up to 2 years.
There are two types of policies: short term and long term–
Short policy covers the policyholder for up to 6 months while long-term policy provides coverage for 2 years. There is no obligation on the usage of amount paid by the insurance company. Choose an insurance company very carefully to buy an income protection cover. Get a policy that offers maximum benefits and protection and fits into your needs. Make sure to carefully go through the terms and conditions of the company before finalizing the policy; and for any assistance on the same, take advice from your financial adviser.