Income Protection Insurance Guide

Income Protection Insurance Guide

This is one of the most obvious pieces of financial advice out there, and yet many people don’t do it. Have some kind of income protection insurance in place to protect you from potentially devastating costs if you can’t work. However, what you need for starters is the right income protection insurance guide to put you through.

Income Protection Insurance Guide

Having some kind of income protection insurance isn’t enough—ensure you have the right coverage in place.  In this post, you’ll find some of the income protection insurance guide you’ve been looking for. So stick with me till the end of this post.

Why you need it

Let’s face; no no one likes to think about what they’d do if they were suddenly unable to work. However, that doesn’t mean you should delay thinking about how to protect your income in case of a disability or illness. The truth is, not every employer provides coverage through its group benefits program. 

If it probably does, your family might be better served by an additional layer of protection. Unlike other forms of insurance (such as life insurance),there ares no health requirements associated with purchasing income protection insurance. Moreso, premiums are usually more affordable than you might expect. 

What type of policy is right for you? Here are four tips to help you find out.

  • Find out whether your employer offers coverage.

Always find out whether your employer offers coverage and if so, take advantage of it. The reason is that group policies can provide important financial protection for you and your family. Unfortunately, if not, then ask yourself these three questions: 

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Is it because rates are too high? Are employees under a certain age ineligible? Perhaps employees with existing medical conditions aren’t eligible for coverage at all? After asking yourself those questions, do deep research to find out.

  • Consider your lifestyle and financial situation.

In addition to considering cost, carefully consider which factors matter most to you when selecting an income protection plan. For example, if you have dependents who rely on your paycheck, choose a longer waiting period before benefits kick in. 

  • Know your rights. 

Federal law requires employers to offer short-term disability coverage, long-term disability insurance isn’t mandatory for companies with fewer than 20 employees. However, many small businesses voluntarily choose to offer long-term plans because of their value to employees and employers.

  • Understand your options. 

There are two basic types of income protection insurance. The short-term and long-term. Short-term plans cover up to 12 months while you recover from an injury or illness. On the other hand, long-term policies typically cover you for up to 36 months after a disabling event. 

How much do you need?

This should be your first question when looking at income protection insurance. Of course, you don’t want to waste money on a policy you won’t need. Also, you want enough coverage to cover your bills if you can no longer work. 

Figuring out how much coverage you need begins by looking at how much income you need per month and your expenses. Start with 10 percent of gross monthly income, then look at your current living expenses. After that, decide if it would be possible to make up that gap in income through investments, savings, or other sources. 

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Fortunately, a lower level of protection may be appropriate if it is. If not, bump up your budget accordingly, so it covers all bases. You might find it helpful to do some math here—there are plenty of free online calculators you can use. 

When do you need it?

You’re in good health and want to ensure that you protect your income in case something happens to you. People with diabetes, high blood pressure or other condition that makes them ineligible for life insurance would benefit from income protection. You can get either a long-term or short-term policy, depending on your needs. 

Short-term policies are often renewable annually, while long-term typically last five years or longer and might convert into permanent coverage. If you have dependents you’d like to support financially, before anything happens to you, look into an income protection plan. Note that income protection insurance plans vary greatly by provider. 

Most companies offer multiple plans depending on your age, gender, and health status. Be sure to research each company thoroughly before deciding which one best fits your individual needs. It’s also important to note that there are some exclusions regarding disability payments. 

For example, if you’re disabled as result of contracting diseases, you won’t be eligible for benefits under most policies. Moreso, if you’re disabled due to an accident, disability payments will be covered under your policy.

When should you start?

The best time to start income protection insurance is as soon as you’ve left your job. However, if you’re just starting and looking to build a career, now’s a good time to get started. Even if you haven’t found a new job yet, it’s still good to have income protection insurance. 

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After all, not knowing what happens next can make anyone uneasy about their finances. It’s great having basic income protection insurance in place from day one. You can rest easy knowing that if your financial situation changes suddenly, some money is coming in every month. 

This could serve you depending on the time you get back on your feet again. You may also consider waiting until you have children before getting income protection insurance. Most policies don’t cover childcare costs, so having kids could potentially disqualify you from coverage.

What else should you consider?

When working in a white-collar, creative, or knowledge industry, income protection insurance might not be too important. However, if you work in an industry where layoffs are common – such as manufacturing – it’s worth looking into. Your income protection policy will cover you if you can’t work due to sickness or injury. 

This is particularly useful if you have dependents who rely on your income. You may want to consider a critical illness plan, which covers specific conditions that could leave you unable to work. It’s often cheaper than income protection insurance. 

Finally, don’t forget about life insurance. Probably you died unexpectedly, what would happen to your family? Life insurance offers a lump sum payment that can provide for them financially until they get back on their feet. We hope this income protection insurance guide helps.

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