Protect your loved ones with Income Protection
It’s easy to dismiss financial products like income protection. It’s the kind of product that banks and credit providers provide as add-ons for their credit cards, and when we hear the word ‘add-on,’ our ears close over and we shut out the details. It’s understandable, insurance products can get complicated; it’s the reason we have insurance brokers who can explain the details and break it down into easily digestible chunks.
In years past, most people really didn’t know or care enough about this kind of protection because part of being a happy person is having a positive outlook and hoping that income protection is never needed. With the rising cost of bills, food, rent and if you have them – kids, there’s a slim justification for income protection, but when something goes wrong and you can’t work, the benefits will surely outweigh the costs.
Income protection can offer up to 75% of your income if you can’t work due to long term illness or injury. While your health insurance might cover the immediate medical bills, your inability to work means that you can fall behind in bills, mortgage repayments and child costs, affecting your credit rating, and your own and your dependents’ wellbeing. So let’s take the time to go through income protection’s finer points, so you can make an informed choice about your options.
This is how long you must be unable to work due to sickness or injury before the Income Protection Insurance payments begin. For example, a 60 day waiting period means you cannot have worked for 61 days before being able to receive any benefits. This is handy if you know your month-to-month costs because you can have a reasonable idea of how long your savings might last until you need your income supplemented by benefits.
Benefit periods describe the maximum time you will receive payments while you can’t work. For example, if your benefit period is 3 years, then you can receive payments for up to 3 years from the day you claimed. Some consider a longer benefit period a good idea if your children are in school, so if needed your income protection payments can cover the cost of their entire education while you recover. However, this depends on your specific circumstances.
Indemnity vs. Agreed Value
It gets a little tricky here so you might need a double-take! Agreed value means the insurance provider asks for proof of your income during the application process, whereas indemnity means you prove your income when, and if, you claim. This choice affects your premium and how much you get if you do make a claim. Consider how your income might change from the time you take the policy to the time you need it, which in reality can be anytime in your life.
Each provider has different inclusions and you should investigate which policies have extras included. Some of the potential add-ons usually relate to specific needs, such as hospital stays or payments toward out of hospital care and nursing. If you are the primary caregiver in your family, an extra set of well-trained hands around can aid your recovery enormously. Nurses and carers are highly skilled and exceptional at their jobs, so if something does happen, they can provide care more effectively than any family member. In the event that you’re incapable of caring for yourself, you might need help with the day-to-day things like bathing, feeding yourself and going to the toilet. It shouldn’t fall to your family members to help you, so income protection extras can help you heal with dignity and let your family members focus on work or school while you recover.
After considering all this, we are reminded of the real reasons we take income protection. These insurance policies can help your family handle the burden of long term illness and give you the best possible chances for recovery. If Income protection is something you’re considering, start by having a discussion with your family or dependents about income protection and talk through the possibilities. It sounds grim to begin with, but it always helps talking about this cover with your partner even if it is brief. You can compare income protection policies here. You can compare life insurance policies here.