It is unfortunate that income protection is often ignored. As part of the policies that make up the “life insurance family,” income protection insurance provides an impressive amount of coverage when you may need it the most. You might be missing out on something incredibly valuable.
The Dreaded “What-If” Scenarios
According to the Council for Disability Awareness (U.S. non-profit), close to 30 percent of wage earners will be disabled for three or more months of their working career. Here’s another: according to the Australian Bureau of Statistics, less than 2/3 of work-related injuries don’t qualify from Worker’s Compensation benefits.
While striking fear into the reader isn’t the goal, it is important to realise how real the possibilities are. If something were to happen to you and you can’t work, what will happen? Even if you have total and permanent disability (TPD) insurance, that’s only a lump sum, and it can be a difficult future if you’re out for a long time (38 percent chance, given our initial stat).
Unfortunately, the stats don’t lie. There is a real basis to approaching income protection insurance.
Basics of Income Protection Insurance
There are some complications to income protection insurance. As present in many types of insurance, definitions and deferment periods can significantly alter the value of a policy, for instance. It is certainly true here.
How incapacity is defined is vital. You may need to be incapacitated to a varying degree of competency: your own occupation, a suited occupation (relative to skills/education), any occupation, or activities of daily living (daily functions).
You will typically find benefit limits around the 75 percent mark. Take one company, who offers this rate at a maximum of $10,000 per month for up to five years.
Other features include the deferment period, which can be up to the age of 70. Yes, that’s quite a bit, but consider how TPD insurance and this could work together to significantly lower your income protection insurance premiums, while remain covered.
It’s Part of the Family
As we just saw, income protection insurance can work nicely with TPD. They form a vital part of the life insurance family of policies, so to speak.
Complete with life insurance, TPD insurance, and even others like trauma insurance, income protection insurance can offer a comprehensive set of coverage. Events like a death or disability can certainly undermine the financial basis of a family – or business – which brings such needs into view.
Look to package income protection insurance with similar policies, and others as applicable, to save. Bundling insurance policies is always a strong way to save money, and together your family of life insurance policies can give you protection and peace of mind.
Can income protection insurance be an important insurance policy for you? It’s not in the common vocabulary of “needed” insurances, but perhaps it should. You have to factor it into your overall insurance package, which certainly spans a number of areas. However, as the evidence is given, it is hard to imagine too many situations where lacking this type of coverage would be idea. Walk carefully when you decide how to approach this type of insurance; once again, the stats don’t lie.
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