What Are the Benefits of Income Protection Insurance?
1. Ensures Your Income When You Are Not Able to Work
Income insurance is a key to safeguarding your family’s financial security. Have you ever thought what would happened if you were not able to work and give financial support to your loved ones? That’s when an Income protection cover comes into play. If you were no able to work due to a claimable illness or injury this type of policy will pay a regular income for a fixed period of time or until you return to work.
2. Customizable Policy Type
Income protection insurance can normally be customized to its holder’s needs, with cover levels and duration adjustable to personal circumstances and budget. So, a policy can be set to pay an agreed sum or percentage of salary for an agreed period of time (usually between 1 and 5 years) with the premium set accordingly. The period of time the insured must be off work (often called the ‘wait period’) before a claim can be submitted can also be adjusted – the longer this period of time, the lower the premium payable.
3. Tax Deductible in Certain Cases
Both life insurance and income protection may be tax deductible. This is not the same for other insurance types so it could be considered as an exclusive financial advantage for this sort of policy. However the tax deduction is not applicable in all countries. Everything will depend on the country you are based in and the tax regulations there.
4. Bed Confinement and Nursing Benefits
For those covered under a top range income policy, there could be extra benefits to reinforce the illness or injury period that impedes work. If someone happened to have to stay in bed for a long period or required either nursing care or special assistance, some policies will meet these costs as well. This is only applicable in certain cases. We’d like to advise you to check out your policy for further details.
5. Injury or Trauma Benefits
Some specific income protection policies also pay fixed lump sums for a range of injuries such as the loss of the use of a hand or arm or loss of sight or hearing. These are additional benefits and are not common to all policies.
6. Death Benefits
Death benefits are inherent benefits in the case of life insurance policies but they are sometimes also offered as an extra complement of income protection insurance policies too.
7. Additional Child Care
If an income protection policy holder is unable to take care of their children due to illness or injury some policies allow them to claim a child care benefit which provides financial support to cope with expenses like school fees, babysitting and nursing services.
8. Income Protection Cover Freezing
One of the main conditions for claiming an income protection policy is being employed and actively working at the time the accident or illness. But if the insured is temporarily not working due to a change of jobs, redundancy or some other factor not related to illness or injury then there is no income to protect during that period of time. Some policies allow the cover (and premiums) to be frozen or suspended when this happens.
9. Easier to Claim than Other Types of Insurance
Income protection can be claimed as soon as the waiting period has expired and an employer can help verify that the insured has been unable to work and what income they have lost as a consequence. Companies can easily act as intermediaries to formally demonstrate sick leave. Being this type of policy based on temporary unemployment periods, the insurance claim process can be straightforward.
10. Cover by Redundancy
Unlike Income protection that covers employees from unexpected accident and illness; a redundancy policy covers its holder from being unable to work due to other involuntary external factors. On the other hand, we have Accident, Sickness and Unemployment (ASU) policies which cover periods of temporary unemployment and incapacity as well as redundancy. ASU policies are usually more affordable than income protection and their deferred periods are often shorter. In certain cases Income Protection policies can behave as ASU policies, covering involuntary redundancy and comprising shorter periods of time (up to a maximum of 12 months). This last policy type could be understood as a hybrid between ASU policies and Income protection; a sort of short term income protection.