What is Income Protection?

As the name implies, income protection is insurance which replaces a substantial portion of income should you or your spouse become injured or ill and unable to work for an extended period of time. This benefit is usually purchased through disability insurance policies and it is a wise investment. The income protection benefit is in addition to health or medical insurance which just covers the medical portion of bills.

Income protection policies are designed for those individuals or business owners under age 60 who rely on employment income and do not have sufficient savings or liquid assets in the event of life devastating events such as long term illness or debilitating injury. Typically, these policies replace up to 60% of employment income.

The length of time the policy will pay varies by company and depends on the individual circumstances of each situation. Additionally, many policies offer the added benefit of rehabilitation and vocational training should the injury or illness prevent the person from returning to their professional field.

Each policy is different and covers different types of injuries and illnesses. The policies should be outlined in detail in the definitions section of the policy and if your policy doesn’t offer income protection you should ask about it. Be sure to check the details to ensure that your individualized situation is covered. Also, research the benefit payment period and the monthly benefit amount as these can vary greatly. Lastly, make sure to ask your agent if you have any questions.

You may also interested in...