Jan
27
Are you considering taking out income protection insurance but you wish to know more about the cover before going ahead and paying for it? This kind of insurance policy was established to help individuals who lost their salary by giving them a replacement income. The protection is typically useful in these three different ways.
So, for example, if you have an income protection insurance policy to rely on then you may qualify for your provider to pay you part of your salary as replacement income if you:
• are unable to work due to suffering a specific illness;
• cannot work because you have had an accident;
• lose your job for a specific reason such as redundancy.
It is possible for these three things may happen to any of us, at any time. After all there is no job security any longer. Nobody is able to avoid illnesses that strike out of the blue or accidents that put them out of action for significant periods.
Without income protection insurance in place to cover these things happening you may have to rely on:
• company benefits (if you (are eligible)
• state benefits/mortgage help (if you qualify);
• any savings you may have stored away
Whilst these alternatives may help and may be useful, they may not, in many cases, be enough and they may not last for long enough. Not having a regular wage coming in, even for just a few months, may make it hard for you to pay your mortgage, meet any debt commitments and pay for your general living costs.
Adding money worries to the mix when you aren’t able to earn because of illness, accident or unemployment may not be a great idea. It may be that looking at this kind of policy might be useful if you want to avoid this happening.
What are the typical benefits to taking out protection?
• short term income protection (often called ASU insurance which stands for accident, sickness and unemployment insurance) may pay you a replacement salary for a short period of time if you become unemployed, get ill or have an accident. When taking out this policy is typically provides you with 12 months peace of mind of an income while you recover. Benefits on offer may also include advisory services to help you find a new position;
• long term income protection may pay you a replacement salary for a longer period if you are unable to work due to illness or accident. Benefits typically offered with this protection will last for as long as the policy has been set up for or until you reach retirement age, die or find a new job (usually whichever comes first).
If you have income protection insurance in place and qualify for a claim then your provider pays you a significant percentage of your income. This may be useful to have and may make the difference between having enough money in your pocket to meet your financial needs and having to worry about how make ends meet.