If there’s anything the past year has taught workers, it’s that income isn’t always guaranteed. Whether you’re worried about losing your job due to another pandemic or are concerned about falling behind and losing wages due to an injury, there are many reasons to consider income protection. You might not realize it, but just like life insurers provide life insurance products in order to provide your family with money in the chance that passes away, there are other insurance companies that provide income protection insurance in case you face a problem like permanent disability.
Just because you might qualify for income protection doesn’t mean that you necessarily need it. That being said, if you have a high-risk job that actually puts you at risk for a serious permanent disability, it may make sense to look into income protection policies. Different insurance companies have different insurance policies that can help you avoid financial dilemmas should you lose your job. Learn more about income protection below—as well as what you should look for when evaluating different insurers.
What exactly is income protection insurance?
Depending on your policy, income protection insurance helps to cover a portion of your income whether you’re losing wages due to permanent disability or partial disability. Different policies have different premiums and terms; however, the important thing to know about income protection insurance is that it pays up to about three-quarters of your annual income over a set period of time. If you have a high-risk job in the construction industry or another dangerous field of work, this sort of protection can be critical to staying on top of your financial obligations. Another situation in which it might make sense to get income protection is if you’re the sole breadwinner for your family. If your spouse and children rely on your income in order to make ends meet, you don’t want a permanent disability to get between you and your financial sustainability.
What should you look for in an income protection policy?
This may seem obvious, but one of the first things you’ll want to make sure of when you’re evaluating different insurance products is what locations they serve. Especially if you’re looking at online insurers, it’s easy to come across different income protection and life insurance products that are only for consumers in particular areas of the world. The Australian life insurance industry is much different than the Canadian or United States life insurance industry, in part because of rules and regulations set forth by the Australian government. As such, if you were interested in finding income protection insurance in Australia, it would be a better idea to Google something like “income protection insurance Australia” than to Google a more generic phrase such as “income protection insurance.”
Looking at different income protection policies, you’ll probably want to look at premiums as well as monthly payment amounts in order to know whether or not a specific policy is truly going to be a good fit for you or not. That being said, there are other features to consider when it comes to finding a good income protection policy. For example, in some policies, redundancy is covered in addition to partial or permanent disability. If you feel like your role puts you at risk of redundancy—especially after the COVID-19 pandemic—it may make sense to find a policy that covers redundancy beyond disability.
While many people know to compare premiums when looking at different life insurers, not as many people may know to pay attention to key features in an income protection policy. As such, it’s a good idea to understand what income protection covers and what to look for in a policy. Use the information above to your advantage and you’re bound to find a policy that meets your needs.