What is the need of income Insurance?
There is a financial insurance-contract type that can stop the worries of people who are afraid of having a fixed income at the present moment but possibly losing it the other day. The safety of one’s income is quite important, especially for those who have families. The future is uncertain, and if something bad happens, families may easily become bankrupt and may go to ruin.
Therefore the Income Protection Insurance comes as a revelation. This insurance-product is recommended for those whose main source of living is their fixed income, which is, though, not protected. By insuring this income, one protects both himself and his family. But how can it happen that one loses his/her income? The most typical scenario would be an unforeseen accident due to which one becomes unable to work for a certain period.
One can become ill or handicap, and in such situations medical coverage only pays for the medical bills and expenses. But an ill or disabled person will not get his/her regular income because he/she cannot continue to work. This was the primary reason for which Income-protection Insurance was designed.
What are the costs of the income insurance?
Generally speaking, this insurance-type is provided by one’s employer. However, its costs are deducted – most of the times – from employees’ pay-checks. The costs are a certain percentage of one’s salary, and this amount is not taxable. One is usually required to pay this until becoming 50 to 65. Although it may seem an unnecessary expense, Income Insurance protects people who are dependent on their fixed income. Moreover, this protection is worth considering not only for those who are dependent on their incomes, but for all working-people.
What happens in those situations when the insured becomes unable to work, but only temporarily?
In such circumstances, the income insurance will pay the insured a certain percentage of his/her salary during the period he/she is unable to work due to sickness or injury. People should know, however, that the length of one receiving these payments is a matter of the contract-term. The waiting-period may be two or four years, but it may also be a longer period, up to age 65. This varies depending one the insurance-premiums one has paid until the insured event happened. As the length of the coverage in case the insured becomes unable to work is quite important, this requires further reconsiderations before one purchases his/her Income-Insurance.
Is this product useful for young adults?
Those who are single or have no dependents do not need to think about life insurance. For these people, Income Insurance can be a better protection-option. There is a slight chance that an individual from this category becomes unable to work, and in this situation Income Protection will help a lot. Generally speaking, if an insured event occurs, the insured people are covered for 75-80% of their salaries.
How can one choose from several offers?
Shopping around and comparing several insurance-products is essential, as both the types and their prices vary considerably. Insurance-premiums depend on the age and gender of the insured (as one gets older, premiums tend to increase), as well as his/her health and pre-existing medical conditions. Premium may also be a matter of smoking habits and occupation-type. One may also be required to choose the time he/she accepts to wait before getting the first payment. The more one waits, the less the premiums are. However, the price of a general Income Insurance is around one week’s salary yearly, with the premiums being tax-deductible.
Finally, here are some tips that are worth considering! First of all, people who purchase this insurance are recommended to compare product disclosure-statements and read the small print in order not to be trapped by the insurance company. Asking for the help of an insurance professional may be a good idea as well. When purchasing Income Insurance, one must know the following about the product: what is covered and what is not; what is the length of the waiting and the benefit-period; what is the amount of the insurance-premium? Last, but not least, it is recommended to get a non-cancellable policy to prevent companies from reassessing health and other factors, and thus possibly raising the premiums.