What is Income Protection Insurance?
Income Protection Insurance essentially exists to protect people who are suffering from financial burdens as a result of an accident or sickness that has left them disabled and weakened. This Insurance is commonly found in countries such as Australia, New Zealand, and even South Africa.
The Insurance Company decides whether the potential policyholder can be considered for this insurance by judging them based on whether they are working comfortably in a paying job that is suited to their usual line of work, after their accident. The company also assesses them based on whether they are working in a job that is suited to their education (i.e., their degree or line of work) and if they can work in any job at all.
Types of Income Protection Insurance
There are many different types of Income Protection Insurance. Some of these include
- Permanent Disability Income Protection Insurance
- Workers’ Compensation Policy
- Disability Overhead Policy
- Indemnity Value
1. Permanent Disability Income Protection Insurance
If you have been subjected to an accident or an illness that has left you permanently disabled and unable to recover, your home and work life will be severely affected. If you get total permanent disability insurance, you are protecting yourself from the risk of paying a large amount of money from your pocket for medical and home expenses, in case of a permanent disability.
2. Workers’ Compensation Policy
This Insurance policy covers the losses of the people who have suffered disabilities or injuries specifically during work. Through this policy, you will receive a sizeable portion of your monthly income, and your medical expenses will be taken care of until you are well again.
3. Disability Overhead Policy
This type of income protection insurance policy covers your monthly expenses. These expenses could include rent, maintenance, and even taxes. The important thing to note about this type of insurance policy is that it is not based on the expenses that have been predicted, but the expenses that have been acquired each month.
4. Indemnity Value
According to the Indemnity Value Income Protection Insurance Policy, you will have to pay a monthly premium that is around 75% of your monthly income before your disability. Due to this, there is a chance of you paying a lesser premium if you earned less money 12 months before your disability. Furthermore, this type of Insurance Policy is the cheapest kind and is widely common in Australia.
Benefits of Income Protection Insurance
There are many benefits of getting Income Protection Insurance.
- Income Replacement: It covers 75% of the worker’s income and payback when circumstances are worse and need financial aid.
- Rehabilitation expenses: In case you have been subjected to an accident or have suffered an illness that has rendered you incapable of working, your income insurance plan will finance your recovery process. This includes different forms of rehabilitation, such as mental and physical therapy. Rehabilitation expenses include physical therapies, addiction treatments, home or workplace modifications or other recovery options. It includes both the rehabilitation programs and manages its expenses.
- Accommodation and travel expenses: If you have to travel a long distance for medical reasons (i.e., to visit a specialist), there is a good chance that you might not have to pay for your trip. Or that a significant portion of the money you spent on the trip will be reimbursed to you. And your family also get accommodation facilities to live near you. Medical expenses of treatment can be achieved from Health insurance, which gives you great relief.
- Transportation and Overseas expenses: Childcare expenses: If you were exposed to an accident at an earlier stage of your life and you have a family, especially young children, to look after then your insurance plan can offer various childcare benefits such as a maid or nanny who would live with you and take care of the house and the children if you are unable to.
- Injury or trauma expenses: If you experienced any trauma you can get benefit from income protection insurance. It provides the lump sum amount or the expenses which may cost for that specific trauma.
- After Death expenses for the family: Unlike life insurance income protection insurance also provides some benefits in case of death of the policyholder. But income protection insurance provides the benefits if the insured person died in case of injuries or disability after any unexpected accident. This insurance policy doesn’t cover the fatal accidents.
- Premium freezing and pause options: In case of temporary unemployment policyholders get the opportunity to freeze or pause its policy cover. And when you get a job to renew the policy again.
Is income protection insurance is worthful?
Income protection insurance provides many benefits along with some drawbacks. But if we analyze the whole things then income insurance is really a worthy decision. Imagine you are a self-employed person and unexpected accident happened which causes your disability and unable you to earn then income insurance provides you financial back. It also shares the stress of financial expenses in case of unemployment, provides support to your family and also provides savings for any emergency situation.
Prominent Companies that offer Income Protection Insurance
Many Insurance Companies offer good policies on Income Protection insurance. Some of the best Insurance companies include
1. Noble Oak Income Protection
Noble Oak Income Protection offers the cheapest and most affordable Income Protection Policies. In this, you can cover approximately 75% of your income before you were disabled if you were unable to go to work following an injury. Furthermore, Noble Oak had increased its maximum monthly benefit from $25000-$30000 in September 2018.
2. Insurance Line Rate Saver Income Protection
Insurance Line has one of the best and most comprehensive Income Protection Insurance Plans available. You can choose a benefit of up to 85% on your regular income. Also, you can tailor policies to a great extent to suit the needs of you and your family.
This becomes extremely convenient. Thus, Income Protection Insurance is a great way for you to plan a sustainable and protected future for you and your family. With great Protection Policies available online, and comprehensive plans that you can easily understand and negotiate, Income Protection Insurance is one of the most important things you can do for yourself.