Money Management

What Is Income Protection?

Income insurance provides coverage for people who find themselves unemployed. In a typical Income Protection plan, you are protected under instances of unemployment, sickness, and accidents. The insurance plan is designed to offer protection up to 70% of the person’s gross salary. The coverage replaces your salary as a tax-free amount so that you don’t have to go through financial hardship while you cannot work.

Why Should You Take Income Protection?

If you feel your current job does not provide a strong level of security, you have dependents, or if you are self-employed, good Income Protection plans are offered by most insurance companies, whilst some specialise in this area of insurance such as www.freedominsurance.com.au. Income protection is a very useful product for anyone who would like to secure their salary so that they don’t end up falling behind on their payments and other expenses.

How Long Does It Last?

The longer you want a policy to have the provision pay for a certain benefit term, the higher the premium will be. There are plenty of short-term policies which are designed to provide you with payouts in case you are not able to work for a set period of time. This is usually between 6 months and a year.

The Long-Term Policies

You can always compare policy terms up to as much as 75 years. However, remember that many plans only provide cover till the time you retire, which usually lasts till one reaches the age of 70 years. Usually, people choose a set period of time that is linked to the expected repayment date of another financial agreement, such as the mortgage on the house. You may not be tied to the policy for as long as that, but you can still keep on paying premiums every month for the protection to remain in your name.

How Much Insurance Cover Is Offered?

How much cover you need depends on the circumstances. It is important not to under or overestimate this amount. There are tons of ways you can get the correct income protection that fits your bill. Even though you can secure up to 70% of your income for your coverage, you can always opt for a lower percentage. This means that your premiums will be lower.

Many insurers offer you the option of also protecting the benefits you are offered during the time of employment. If you choose an Insurance Protection plan through your current employer, you should know that if you choose to leave the place of employment, your insurance protection will end with it. Therefore, be sure to consider self-insuring your income as this way, you will be able to pay premiums no matter where you work or how many times you switch your job.

If you are convinced that this insurance plan is for you, there is one last thing you must know. Even though everyone is looking for ways to save funds for a rainy day, there is a significant amount that can be matched for that sort of payment through a range of policies such as life insurance, income protection, and illness cover.

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