What Benefits Do Income Protection Insurance Offer?
Sorting through the existing plans that help a worker in times of involuntary unemployment can be confusing. In many countries, there is federal unemployment plan that pays partial salary benefits to unemployed individual. In the United States, the individual states have programs for this purpose and the federal government offers coverage to federal employees. Most countries also protect workers with disability insurance, which covers loss of income due to an inability to work.
Additionally, most mortgage issuers offer separate Mortgage Protection Insurance that will make payments in times of involuntary unemployment, and similar Credit Insurance plans are offered by credit card companies and small loan providers. These programs certainly have merit and will pay a portion of the worker's salary for a specified amount of time. It is important to know which programs apply in each case and what the total benefit paid will be. Very often, it is enough to keep the employee comfortable but does not approximate the value of the existing salary.
Income Protection insurance coverage is becoming an appealing option, especially to higher paid workers. This form of insurance is purchased and paid for by the individual who wants to protect his or her salary amount in a manner that will insure a similar monthly payment to the amount the employee is used to receiving for as long as it is needed. It is up to the individual to determine if the additional benefits offered by this insurance will be sufficient.
In order to make this determination it is necessary for the individual to know what benefits are offered by Income Protection Insurance by examining the policies and coverage of several reputable providers. In general Income Protection Insurance offers coverage in amounts that exceed that of federal programs and last for a longer time period. Benefits are paid, on average, for up to two years, if the employee receives no income during this period. If the salary is above the standard range, additional Income Protection coverage may be purchased. The standard range for benefits payable under Income Protection cover is 85% of the employee's gross annual salary at the time of claim the claim is made. The general salary cap is $20,000 per month.
Most insurers limit the payable yearly benefit to 75% of the annual income. The benefits will be adjusted yearly to reflect the changing cost of living.
Income Protection Insurance offers benefits in amounts that will enable the insured, in most cases, to continue in or her same level of lifestyle in times of involuntary income loss, rather than just be able to keep up with the mortgage and bills.
by Sally.Anderson 19 years ago