Income protection should be part of ensuring one's financial security. Having a regular source of income isn't enough, since your salary pay might be significantly reduced in the event of an acute illness or physical trauma. Having insufficient funds can have dire consequences. Where will you get money to buy food? How will the family come up with enough money to pay the monthly bills? These types of questions will surely aggravate the uncertainty of your socioeconomic situation. To prevent being short of funds in times of need, it's a wise choice to avail of an income protection policy.
How does income protection insurance work? Simply put, in exchange for premium, income protection insurance disburses money at regular intervals when you get sick or are injured; until such time that you are again fit to work. The length of time covered can vary from one year to until the beneficiary reaches sixty-five years old.
There are different types of income protection insurance. There are those that pay out in proportion to the fluctuations in income (called agreed value insurance), and there are policies that have constant payment benefits regardless of income changes (indemnity value policies). Choosing which one to get all depends on individual situations. Typically, income protection insurance covers up to seventy percent of the total monthly income, which are just enough to pay for the monthly expenses.
The premium to be paid depends on several factors. Age, gender, and occupation can have an influence on the payment. Pre-existing health conditions as well as habits that can affect one's health, such as cigarette alcohol use, are also contributing factors. The length of the deferred period, aka the time between claiming the policy and the time when its payment benefits can be reaped, is also taken into consideration. A general principle is that the longer the waiting period, the lower the premium.
When deciding which policy to obtain, make sure to read and understand the fine print, and be mindful of the terms and conditions before signing the contract. You should know how much the premium would cost, and you should have a rough idea of the payment benefits. It would also be important to know the length of the deferred period. Other crucial details would be the length of the policy, as well as exclusion criteria that would not be included as coverage. Most insurance policies do not consider self-inflicted harm, alcohol abuse, pregnancy, as well as criminal acts as grounds for disbursement of funds.
Acquiring income protection insurance may seem like a very technical and grueling process. The different kinds of policies can have terms and conditions that you might not agree with. But if you take time to know about the types of policies available, you will find that its advantages offset the costs of maintaining the policy. It's definitely a useful investment that can be helpful in times of hardship due to sickness or physical injury. Income protection insurance is a rewarding preparation to make ends meet should unfortunate events occur.
