Falling sick is no strange thing to the human body. If you work in a company, you have sick leaves for those rainy days. You don’t have to think about the paychecks coming in. But the sick leave holidays are numbered, and what do you think will happen when the days come to an end? Do you think your employer will continue to pay you in your absence? And if so, then for how long? Big companies may hand you out a book providing such information, but you don’t know or didn’t bother to ask for many small companies. If you have a mortgage, it is very well known that you have to keep paying the loans no matter what, or it may lead to property siege.
This is where Income Protection Insurance comes in place. Income protection policy is different from life insurance or critical illness insurance because it neither covers the dependents’ nor medical treatment expenses. Instead, it covers the mortgage, tax, bills, etc., if your paychecks stop coming or give you a regular income if you can no longer work due to illness or injury.
When do you need Income Protection?
It depends, as this policy is designed to cover your living cost rather than paying out your beneficiaries after your death. So, it is useful even if you are young and have no dependents, but it is a must-have when you have a mortgage, bills, and taxes to pay with your family members depending upon you.
Benefits of Income Protection:
- Stable income during absence:
If you successfully claim your insurance protection policy, you don’t have to worry about the bills that need to be paid.
- Income-based on the previous salary:
Your monthly income from the policy will be based on your earnings before your leave. The pay-out will be a certain percentage of your previous salary based on the policy type you choose.
- Several plan options to choose from:
Different companies may provide different plans. There are short-term plans and long-term plans. Different types of plans will pay a different percentage of your previous salary, like- short-term plans will typically pay between 50-60% of salary, whereas long-term or premium plans may pay 70-75% of your salary. But both plans will run till the contract ends.
- Wide covering range:
It covers most illnesses that may leave you unable to go to work. It is advised to discuss this clearly with the policy company.
It is important to have Income Protection Insurance as you never know when you fall sick. However, it is wise to consult with a good company to get a better deal on the policy.