Income Protection Insurance Basics
When you try to understand what income protection insurance is all about, it seems to mean the protection of one’s source of income or the insurance that covers the person’s means of making a living. In essence, it basically is a form of insurance that covers a person’s source of income.
While income protection insurance is relatively a new term for Americans, it is a common enough form of insurance for Canada, Australia, and the United Kingdom. The most common kinds of income protection cover small businesses and salaries. Income protection is often a good policy to have in case of illnesses or emergencies that might cause you to close shop or be away from work, which in effect, causes you to lose part of your income.
Income protection insurance usually provides the policy owner a source of funds should they be incapacitated or injured and therefore unable to work or operate a business. Usually, the amount payable to the person who avails of this kind of insurance is 75 percent of the gross income they earn every month and is not payable in bulk on in a lump sum. Such disbursements are paid in monthly sums, just like you would receive were you receiving a salary or monthly due. This kind of an insurance also covers illnesses and not just injuries or accidents since we do take to bed should we get sick, thereby disabling us from getting to work and earning our keep.
A person may tend to ask, why do we need to have income protection insurance? The answer is simple. We all may be in the pink of health with all the recent vitamins and supplements we take every day. We may be physically fit due to our daily trips to the gym or our daily runs in the park. We may even take it a step further by being so careful with everything we do and what we eat that we are beginning to be labeled as an Obsessive Compulsive. No matter what the circumstance, we never really know what will happen later, tomorrow, or next week. With all the advancements in science and such, cures are being discovered every day, vaccines are being produced, and illnesses are being cured. This, however, does not guarantee you safety from new illnesses that pop up every day. Nor does this protect us from accidents that may be the doing of other people’s carelessness or folly.
This is where income protection insurance becomes very vital. You need money for daily living, and should you be unable to generate such income through work because of unforeseen circumstances, wouldn’t you welcome the fact that you have the income protection policy in your bag to back you up? Another nice thing about this kind of insurance is it is tax deductible, so the premiums end up costing less than you initially though it would. The benefits of having this insurance are indeed undeniable. Just think, what would you do if by chance you are debilitated for more than six months? Where would you get the money for your consumption and other daily expenses? The answer is income protection insurance.
by Maria-Goldsmith 19 years ago