Although it’s called “life insurance,” most of us never associate life insurance with living. Rather, we think of it as a safety net for our loved ones after our death, replacing your income. Not enough people realize, however, that there are insurance products available that can protect your income in the event of a catastrophic event that renders you unable to provide for yourself and your family.
Insurance For the Living
Personal Insurance falls into two broad categories: policies that pay out after your death, and policies that pay out during your lifetime. Policies that pay out during your lifetime are designed to replace or supplement your income should you become disabled or otherwise unable to work due to illness or an accident. There are a number of these “living” insurance policies available.
The simplest insurance for the living is income protection life insurance. This insurance cover replaces income may be lost should you be unable to work because of an injury or illness.
Income protection cover is important for anyone who is the major or total source of income for himself or his loved ones. While income protection maybe suitable for anyone, it’s especially important for the self-employed or business owner.
Most income protection policies cover up to 75% of your income, and for a defined period.
A serious illness or injury can deplete your savings and send you into a financial tailspin. Trauma cover insurance can help offset the financial impact of a traumatic injury or illness, providing you with funds to pay for out-of-pocket medical expenses, ongoing therapy, lifestyle modifications and debts while you recover. Some trauma cover policies also cover lost income, but these policies are most often sold in addition to income protection policies.
Trauma cover policies only cover specific injuries and illnesses, all of which are explained in the policy. Additionally, when you apply for trauma cover, it’s important to be honest about your health history and any other pertinent information; failing to be honest can result in denied claims and lost premiums.
Total & Permanent Disability Cover
Thankfully most of the illnesses and injuries we face are of a limited duration. However, should you be totally or permanently disabled, your ability to provide an income for yourself and your loved ones is also permanently altered. Total & permanent disability cover can help offset the financial burden that disability often results in.
Total & permanent disability cover helps cover expenses that arise from rehabilitation, cost of living, and debt repayments. The catch is, not all permanent disability cover is created equal — some policies cover you only if you are unable to work in your current field, while others cover you if you are unable to work in any field. Furthermore, what is considered a total and permanent disability can vary from insurer to insurer.
As with any life insurance cover, you’ll need to be honest and upfront about any previous illness or injuries, or risk throwing the premiums you’ve paid away if a claim is denied.
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