Understanding Income Protection Insurance
Income protection insurance is a type of life insurance that is often overlooked by most people. While people know the value of having life insurance and health insurance, they often assume that they will always have the ability to earn an income. Considering the pace of modern lifestyle and that most people commute to and from work, there is a fair chance that one day you could be involved in an accident. Your injuries from the accident could have you off work for a week or even a month, in which case it is not too serious a scenario. Most people could get by without an income for a few weeks. But what if your injuries affect your ability to go back to work full-time? What if you need to be hospitalized for several months and require extensive rehabilitative treatment? What if you cannot earn the same income you could before?
What Is Income Protection Insurance?
Income protection insurance is a type of life insurance policy that pays out in the event that you are physically unable to earn an income as a result of an injury or illness. Typically, income protection insurance caters more for long-term disabilities rather than for disabilities that last just a few weeks or months. For example, if in a car accident you break both your legs, it could be that you merely are in casts for several weeks after which the bones heal and you will be able to walk normally again. Alternatively, you could have a knee cap that is so badly crushed that you will not be able to put weight on your leg or walk properly. You rehabilitation may require extensive surgery over a period of time and you may be unable to return to work for almost six months. In this case, income protection insurance could help cover your daily living expenses. Most often income protection insurance is most valuable when you suffer from a permanent disability, such as if you were to become a paraplegic or lose an arm, hand or foot. This type of disability would greatly affect your ability to earn an income.
Who Should Take out Income Protection Insurance?
Think of your monthly expenses. Even if you are a single person with few responsibilities, it is almost certain that you will still have a few debit orders and bills that need to be covered each month. Even though you may not have dependents, if you were to lose your ability to earn an income, who would take care of you? You might be able to move in with a sibling or your parents for a while. But consider this, would they be able to afford to look after you? An income protection insurance payout would not only secure your ability to pay your bills. It would also provide you with the funds so you can make the necessary alterations to your home and vehicle so you can continue to have a level of independence. A married couple will have an even greater need for income protection insurance. Even if you have two incomes, it is almost certain that your monthly expenditure relies on both of them. If one income is taken away due to illness and injury, would you be able to survive financially? It goes without saying if you are the main breadwinner in the family that income protection insurance is absolutely essential.
What Are the Added Benefits of Income Protection Insurance?
Most income protection insurance policies pay out an initial lump sum and then monthly payments. When taking out the policy, you can set the delay period for the payments to start. Most people will choose between one and three months, although some people do choose the six-month or 12-month option. You need to be aware that whatever you choose, you will need to have enough money available to cover your expenses until the payouts start. The funds from the insurance payout are most likely to cover your month-to-month expenses. An added benefit is that you can use the funds to make any necessary alterations to your home. For example, if you are now wheelchair-bound, you may need to install ramps so you can access your home. You may also need to revamp your bedroom, bathroom and kitchen so they are accessible to you in your wheelchair. These are all things most people don’t consider until they find themselves disabled.
Aaron Irwin is a representative of Guardian Insurance. With Guardian, insurance cover is uncomplicated and easy to apply for. Our products are transparent, flexible and easy to understand; offering financial protection for your loved ones and peace of mind for you in a matter of minutes, over the phone.For income protection insurance quotes. Visit us online today!
