Life Insurance And Income Protection – What You Need to Know

Income Protection

It is now possible to bundle up your life insurance cover and income protection in a bid to get sufficient insurance.

Income protection insurance is designed to offer benefits to the policy holder in the event that he or she is incapacitated to work due to an illness or injury.

In most cases, the insurer will offer upto 75 percent of your income; the payment is remitted monthly. The cover may also include benefits, commissions and bonuses.

This financial support is essential to enable you to meet your monthly commitments. These obligations may include: food, petrol, credit card debt, fees, utility bills and mortgage payments. This means that you can maintain your lifestyle and standard of living in spite of any injury. Life insurance and income protection offer a critical hedge against life’s uncertainties.

Life insurance vis-à-vis income protection

There are several key distinctions between income protection and life insurance. For starters, with a life policy, the payment is in lump sum once the policy holder dies. Income protection on the other hand offers ongoing benefits that are paid out monthly. This is offered in the event that the insured is not able to work due to an injury or illness.

Life insurance does not put a limit on the amount of cover. However, most income protection insurers will only allow you to insure up to 75 percent of your pre-tax income, although some may stretch to 80 percent. Another difference is the policy’s expiry period. In a life cover, the policy is valid till one attains 99 years of age. Life insurance policies are normally held until the age of 65; certain policies may allow up to 70 years, but most do not exceed this age.

The need for income protection insurance

If statistics are anything to go by, there is a lot of supporting evidence as to why people need to take out an income protection cover. Statistics indicate that 70 percent of working Australians are forced to take 6 months off work due to accidents or injuries. Most have to contend with long-term conditions that come with huge financial obligations. This trend is quite alarming and a wake-up call for people to seriously consider the importance of income protection. Accidents often occur at the worst possible times, and when this happens, this type of cover can make a huge difference in your life and those of your loved ones. Read: No insurance, how to sue someone

Compare quotes

Conducting a comparative analysis is the best way to shop for insurance. You can find numerous websites dedicated to providing insurance quotes from different providers. This makes the process of searching easier and less of a hassle. Ensure that you obtain this more information from sites that are not affiliated with any insurance providers. Check on the features of various plans and ensure you have adequate insurance based on your needs and the needs of your family.