Determining Income Protection Insurance Premium Cost
Even though it is going about things the wrong way round, people often make a decision to purchase a much needed policy only after determining to cost of Income Protection Insurance premiums. Often they let the affordability of Income Protection Insurance determine whether they obtain it or not. Another way to view the issue is to consider that the person who is unsure whether he or she can afford an extra monthly payment, if the kind of person who absolutely cannot afford to be without a monthly income. This is exactly what Income Protection Insurance protects against.
The potential policy holder will want to insure his or her total salary amount, since most Income Protection Insurance providers pay a maximum of 85% of the current monthly check. The premium cost is dependent upon two variables, the salary amount and the age of the insured. The rates will be proportionally higher with both increase age and a large salary.
Of course, the exact Income Protection Insurance Premium Cost will vary with the type of policy, the insurance company, the total coverage and other variable, but it is possible to calculate an estimate of what the premium cost will be before speaking with agents. This will allow the potential customer to have some confidence that the types of policies being discussed are affordable and prevent both surprises and potential embarrassment.
Income Protection Insurance coverage is generally sole in units of coverage; each unit represents an average of 600.00 per month of adjusted salary. The maximum number of units in the standard coverage is 7, so if your monthly net salary exceeds 4200.00 dollars per month, you will be given the opportunity to purchase additional units. To calculate the cost of your cover you simply need to multiply the number of units of cover you require by the cost per unit for your age next birthday.
The premium cost is figured out by taking the number of units that the policy buyer elects to purchase and multiplying by an age factor, which is given in Cost per Unit Coverage Charts prepared by the individual insurer. For example, an average value from Insurance Company chart for 5 units of coverage, which would protect a monthly take home salary of 3000 dollars, and an the value for an 45 year old employee is 27.00 per unit. Therefore, this hypothetical employee would pay a 135.00 monthly premium to protect a 3000.00 salary. In the event that the employee buys the insurance and receives payments from the Income Protection Insurance plan, the monthly premium will be deducted from the monthly disbursement.
by Sally.Anderson 19 years ago