Income protection insurance

One of the most valuable resources for protection your financial stability is income protection insurance. An income protection insurance policy ensures that you and your family have the financial coverage you require to maintain your standard of living in the event of an illness or injury that leaves you unable to work for a period of time. The tax-free benefits of your policy can help you keep up with the costs of food, housing and other vital needs until you’re fit to return to work.

Income protection insurance, or IPI, fills an important need for working adults to maintain an adequate income in spite of illness or disability. While state-funded protection benefits may replace a percentage of your lost salary, these funds typically do not cover the realistic cost of supporting a spouse and children. Income protection insurance gives you the supplemental funds you need to live comfortably during an extended absence from your job.

Benefits and Limitations of Protection

In exchange for your premiums, income protection insurance provides tax-free income for a period of time stated in your contract. If you become unable to earn an income because of an illness or injury, IPI pays out benefits monthly or weekly to cover your living expenses until you are able to return to your job, or until the end of your coverage period. If you retire or pass away during the course of your coverage, benefits to you and your family must be replaced by your pension or other retirement funds, or by life insurance benefits.

IPI coverage

The tax-free status of IPI coverage means that you are not subject to normal income taxes. However, your premium payments do not qualify for tax relief, and tax relief from other benefits may be reduced or eliminated whilst you are receiving insurance benefits. If you are covered by IPI through your employer, your employer’s payments for your policy may be claimed as a business expense. This tax benefit may encourage employers to consider offering IPI protection as a benefit of employment.

Income protection benefits are only payable to policy holders who have become unemployed due to an illness, accident or disabling injury. These insurance policies do not cover job loss due to a voluntary resignation, termination or a lay off. Before you purchase a policy, review the list of exclusions carefully so that you are aware of any restrictions on your cover. For instance, many policies exclude income loss due to drug or alcohol abuse, self-inflicted injury, pregnancy, war or criminal activities.

The length of time that you may continue to receive benefits is restricted by your insurance policy. This limit ensures that you have the motivation to resume work once you’re fit to return to your job. If you change careers in the interim, your benefits may be reduced, modified or eliminated, depending upon the risk level of your new profession. While you’re unable to earn your current salary, IPI allows you to fulfill your obligations to your mortgage lender and other creditors, as well as meeting your household’s basic needs.

Income Protection Insurance Rates

In general, IPI is an affordable form of salary protection for healthy adults. Your age, the risk level of your occupation and hobbies, your health status and lifestyle factors such as tobacco and alcohol use may affect your insurance rates. If you have existing health concerns, such as heart disease or diabetes, you may have higher rates or be denied protection by some insurance companies.

The deferred period, or the length of time between the loss of unemployment and the pay out of your benefits, may affect your rates, as well. As the insured, you have the ability to decide how long you can afford to wait before you begin to receive your weekly or monthly payments. When you consider income protection insurance, consider how long your current savings would last, or how much financial coverage your state-funded benefits would provide before you would require IPI benefits to maintain your standard of living.

Comparing quotes for income protection insurance is fast and convenient when you search for affordable cover online. Compare quotes from multiple providers to find coverage within your price range. The cover you receive may make the difference between whether you can meet your financial obligations as you recover from a disabling illness or accidental loss of physical function.

Income protection insurance gives you and your loved ones greater peace of mind, knowing that you have the resources to cope with a financial crisis. An accidental injury or illness can strike any healthy adult. With IPI, you can rest assured that you will be able to provide for your family and maintain the costs of your household in the event of a disabling injury or a sudden decline in your health status.