Every year millions of people find themselves unable to work due to sickness or different injuries. They are unable to fend for themselves and their family due to a lack of income. There has to be some way to pay the bills and stay afloat to get through these tough times. Income protection insurance will come in handy in such situations. Read below to learn more about how and why income protection is a necessity in today’s world.
What is Income Protection?
Income protection insurance is also referred to as sickness insurance sometimes. It is a policy that is made for the long-term. Income protection is designed to help you with cash benefits if you are unable to work due to an illness or injury. Having an income protection policy ensures that you get a regular income until you are able to get back to work. Some of the features of the policy are given below.
- It acts as a part of your income if you are unable to work due to temporary or permanent disability.
- The payment continues until the end of the term or until you restart work.
- The cash disbursement starts as per the schedule set by the insurer. It usually starts after the end of sick leave or after the other insurance payment stops.
- It offers cover for a wide range of illnesses that prevents you from working.
- There is no cap on the number of claims that can be made during the policy term.
- Premiums can be drawn based on your budget and you can pay more to get more coverage.
- It can be availed even by self-employed individuals.
Reasons to have Income Protection Insurance
Many people hesitate at the thought of having an income protection plan as they have to make payment for premiums for the long term. But the upside is, it gives you peace of mind that you are covered financially for most situations. Moreover, there are many insurers who offer policies at affordable premiums making it worth the initial investment. The insurance policy can potentially give you up to 75% of the income in case of illness or injury. That can help in fulfilling many purposes. Given below are some of the major reasons income protection helps families.
Keeping up with Payments
When you are lying in the bed due to an injury or illness, repaying debts can be a worrisome problem. Additionally, there is a need to cover the daily expenses too. If you have a mortgage, credit card debts or any other debts it can all quickly add up leaving your finances in a mess. According to experts at InsuranceHero.org.uk, having an insurance protection plan will be a great help to people with debts. It also helps those who don’t have enough funds to last until they recover. The insurance cover provides up to 75% of your income. This ensures that your debts are paid and don’t pile up. You only have to worry about the recovery and nothing else.
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Provide Protection for your Family
Raising a family is not easy even when you have a stable income. There will be a lot of expenses, especially when raising kids. Most parents work extra to bring home the income they need to lead a comfortable life. When one of the partners is unable to work, there is a lot of financial strain and burden and can impact family life. If you have income protection insurance there is no need to worry about your family. This is possible because there won’t be a major loss of income. Your family is still well cared for irrespective of your health situation.
Can be used to treat a sick child
If a child suffers a serious illness or injury, one of the parents will have to take time off to take care of the child. The parent taking time off means there is a loss of income. Other types of insurance policies will not provide any financial assistance as the parent is healthy and capable of earning. Additionally, the financial support that you get from the government may not be enough to cover the expenses. All this can lead to tremendous pressure which can be overcome by an income protection policy. These can be customized to opt for extra features like family cover where benefits are paid to the parent. It is paid from the period the parent stops working until the time he/she returns to work.
Some Policies cover Redundancy
Depending on the type of policy, a monthly benefit is paid if you are unemployed for a set period of time, for example, 3 months. That will help you pay the mortgage and other payments for at least a few months. The cap, which is in redundancy, should be involuntarily paid and you can remain unemployed for a set period of time only.
Income Protection is Additional Protection
There are many insurance policies that are essential in your financial portfolio to cover yourself and your family against unforeseen circumstances. Income protection insurance is also very much needed as it can cover for any disabilities that will stop you from making income even for the short term. It acts as a supplement to other policies including the worker’s compensation. Income protection acts as an extra layer of protection to those injuries that are not covered under worker’s compensation.
It can happen to you too
Many people lead their lives with the assumption that nothing can go wrong. They think that they will be able to provide a consistent income for their family and themselves and retire at old age. But often, there will be setbacks in life even if you are healthy and careful as there are certain things which are out of your control. By planning for such unforeseen instances carefully, you can lead a happy life.
Income protection is a smart way to plan for the unknown. With that, you are guaranteed that no matter what injury or illness you suffer, you can stay afloat till you get back to work. Additionally, the quality of life of your family and yourself is not compromised.
