Income protection insurance is designed to cover you if you find yourself unable to work and earn an income due to a serious illness or injury. Income protection is a long-term insurance policy that makes sure you can receive a regular income until you retire or can go back to the workforce.
Do you need income protection insurance?
Generally, if an illness or injury means you are unable to work and pay your bills, you should consider income protection insurance. This is more pressing for people with children or other dependents, those who are self-employed or if you are employed but don’t have a lot of sick pay to cover you in case you become ill. There are situations however where you may not need income protection insurance, such as if you have enough savings to live off, have sick pay or employment benefits package, or if your partner or family would support you to cover everything you need. If you are not in one of those situations, income protection insurance gives you peace of mind knowing you can pay bills and maintain your lifestyle if illness or injury prevented you from being able to earn an income.
What are the benefits of income protection insurance?
Income protection insurance can provide many benefits that give customers peace of mind if they were to fall ill, they will be well taken care of. These can include assistance with rehabilitation or support costs, reimbursement for childcare costs as well as financial cover for essential household expenses and bills. Depending on your policy requirements, you can also be covered if the same illness or injury returns and your premiums will usually be tax deductible and adjusted for inflation. If you return to work at reduced capacity, you may also be able to get a partial benefit to ease your return to the workforce.
What if you’ve already got life insurance? What’s the difference?
Income protection insurance differs from life insurance in that life insurance pays a lump sum if you pass away or are terminally ill. Income protection may pay a death benefit in the event the policy holder passes away, but it is meant to insure your income while you are unable to work (not your life).
Every situation is different and there are also other forms of insurance that share some similarities (such as permanent disability and trauma insurance) so it’s important you have a good understanding of what you need cover for and get the best insurance advice from independent brokers. If you’d like to discuss getting the right insurance cover, contact us today.