Are You Scared of Losing Your Job? Buy Income Protection Insurance

Life is full of uncertainties and health insurance is the best way of protecting yourself from them. Often people insure their health, home and assets but ignore their source of income. An accident can leave you partially or permanently disabled for the rest of your life and result in loss of income.

A majority of casualties arise due to road accidents and the numbers of accidents have increased in the past few years. Most accident-related policies have a permanent or partial disability cover where a fixed percentage of sum insured is paid to the policyholder depending on the nature of disability.

While choosing a policy you must opt for income protection benefits depending on your monthly expenditure. The benefits of monthly income are triggered only in the event of death or permanent disability. For temporary disability, income protection benefit would be available only for a brief period.

In addition to being a psychological shock, a sudden job loss will significantly affect your finances. An income protection policy can help you continue paying your loan equated monthly instalments (EMIs) at least for a few months.

Termination from employment due to illness is also covered under these policies. However, the cover is available only for salaried individuals. The cover is not applicable if you are fired for non-performance, or when you resign or retire from the job.

What is Income Protection Insurance?

As the name indicates, income protection insurance refers to the policy that protects your income and continues to give financial coverage to your family in the case of any unforeseen circumstance.  When the earning member loses his capacity to earn due to death, injury, or other reasons, income protection insurance provides continuous financial coverage to his family.

Importance of Income Protection Insurance

The importance of insurance protection insurance can be explained through the following points:

1. Protection against rising prices

Inflation is one of the common problems today. The prices of essential goods and services are constantly on the rise. This means you can only buy fewer things for the same price in the future compared to what you buy today. Income protection insurance protects your family against rising prices. Your income is taken care of, which means your family can live a financially secure life in the future, regardless of the rise in prices.

1. Live life without compromise

One of the main reasons why income protection insurance is important is that it allows your family to live life without any compromises. Even in the case of unfortunate events, your family doesn’t have to compromise on its quality of life. Your loved ones can continue to live in the same style as before without being deprived of any benefits.

1. Coverage of debt

The earning member may have taken some loans from a bank for his personal use and also have other debts in his name, like credit card repayment. All these loans might have been taken based on his regular income. However, due to unforeseen circumstances, if the person loses his ability to earn, it can cause a huge problem when it comes to repaying these debts. This is where an income protection insurance policy can come to the family’s rescue.

What does Income Protection Insurance cover?

The coverage depends on the type of policy you take. Usually, this policy covers financial commitments anywhere around 50 to 65% of your total income.

How to choose the right Income Protection Insurance Policy?

Some points to keep in mind while choosing an income protection insurance policy are:

1. The need for this policy and the sort of coverage you need to maintain your current lifestyle.
2. Compare the premiums of different policies to choose the one that suits your requirements and affordability the best.
3. Your current age and existing health conditions, as these may affect the premiums.
4. How long does the policy take to mature, and how quick is the payout period?

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