What you must know about Income Protection Insurance
Insurance for intangibles like your income may seem extremely strange, but how on earth then do you pay your mortgages if you are unable to work?
What most of us don’t like is an unnecessary burden, which explains why most people when talking about insurance, be it for running a business, protecting a house or car against damage, consider it as a vexatious added fee. Income insurance, at first glance, isn’t too different from the aforementioned perspective; it could be a costly protection that could prove unsuccessful.
Your lifestyle is guaranteed by your income, imagine then loosing your income, it is one of those situations everyone tries to avoid. Seeing as you could replace a car or house but loosing your income could cost you both.
Therefore, consider income protection insurance as a cover for salary lost, it could be due to illness, accidents or any force majeure. Unlike workers compensation though, it works for sickness or injury at any place or time. Moreover unlike government insurance, it pays in accordance to your earning capacity.
If someone is injured under workers compensation, during the first few weeks, they receive higher rate, but then it drops. Hence people’s standard of living would drop if they depend on this mode of protection, says the finance broker.
Income protection policies vary in accordance to their terms and conditions, but they usually offer a 75 per cent gross wages for a maximum time period. It is a type of insurance that is available especially for people who have regular payments to make against debts.
Why then won’t you guarantee your standard of living and regular payments by taking income protection insurance? The finance broker even says… the most relevant aspect of this protection is when someone has a high reliance on income.
When you are someone or have someone with financial responsibilities like a family or a mortgage, that’s an important time to take income protection.
Having a majority of your current income insured against the probability of being away from work therefore prevents you from defaulting that mortgage payment, personal loans or credit card.
Due to that inability to pay your debts, and a complete change in your lifestyle, income protection insurance could be the guarantee that you have for maintaining your lifestyle as well as paying all your debts. Even on time!
“Most people these days have enough stress already, with the economy and the price of housing going up. Income protection gives that little bit of extra peace of mind. It works when you can’t work”, says the finance broker.
Pondering about how to pay your income when away is very essential, and an MFAA Accredited Finance Broker can work with you to help find the right insurance to help ensure your investment in property is protected.
Talk to us today and we will help you with all your financial needs.
*This information is not to be relied upon without speaking to your finance broker, tax agent or financial adviser.