Login
Password

Forgot your password?

Income Protection Insurance- What Is It?

By Edited Mar 29, 2014 0 0

What is Income Protection Insurance

 

Income protection insurance typically will cover up to 75% of your income should you be temporarily or permanently unable to work due to injury or illness.  Some policies do offer an even greater percentage.  The insurance policy provides a broad protection should anything stop you from working.

 

Seventy-five percent of your income is paid to you until you return to work or reach the end of the policy benefit period.

 

 

What Are The Income Protection Options?

 

Different companies offer differing policies.  You will need to identify which policy suits you best.  Things to consider include the agreed value of payment, the duration of the benefit period and the waiting period. 

 

 

Do Income Protection Policies Differ between Insurers?

 

Income protection policies can vary greatly across different providers.  You really need to read the details of the policies to make sure that it suits your income requirements and the premium is affordable.  It may pimply the services of an insurance broker who can explain to you the policies available from a variety of providers.  Be aware however that they will usually get a commission from advising you on a policy.

 

How Much Does Income Protection Cost?

 

This insurance is usually the most expensive personal insurance policy an individual will have.  A benefit is that is is tax deductible as compared to life in surname which has no tax advantages.

 

A number of factors affect the policy premium.  These include:

 

- the age at which you sign up

- your occupation

- whether or not you smoke

- underlying medical conditions

- waiting period between incapacity and payment

- benefit period over which you will receive payments

- any additional items such as one off trauma payments

 

Income Protection Case Study

 

A 45 year old couple with two teenage children have a mortgage of $300,000.  The father earns $60,000 a year from his job in middle management and the mother earns $15,000 per year from casual clerical work.  They have ongoing expenses of $3,500 per month. 

 

He gets injured in a recreational bicycle accident and is unable to work for 6 months while recovering from surgery.  His wife’s income is inadequate to cover the monthly expenses.  Luckily for them he has a 75% income protection policy that pays him $3,750 per month until he is able to return to work and allowing them to continue with their lifestyle.

 

 

 

Advertisement
Advertisement

Comments

Add a new comment - No HTML
You must be logged in and verified to post a comment. Please log in or sign up to comment.

Explore InfoBarrel

Auto Business & Money Entertainment Environment Health History Home & Garden InfoBarrel University Lifestyle Sports Technology Travel & Places
© Copyright 2008 - 2016 by Hinzie Media Inc. Terms of Service Privacy Policy XML Sitemap

Follow IB Business & Money