About income protection insurance

Income protection insurance can provide you with coverage if you are not able to work. With this insurance you are usually protected against sickness and accident only, unemployment only and the more all-inclusive accident, sickness and unemployment cover. Your gross salary of up to 70% will be protected and it is designed in a way to substitute your income as well as pay out a tax-free monthly sum, which you can use to help in easing out any hardship financially while you are incapable to work.


Should I consider taking out income protection?

Income protection is a product that is useful for individuals who want to cover their income or salary so that they will not fall behind with monthly expenses if in case they be unable to work. People who consider it usually include those who are struggling to make ends meet if they no arriving salary, if they are self-employed and if they have dependents.



How long does the term of the policy usually last?

Most insurance providers will usually cover you up to your retirement age and generally the maximum age accepted as retirement age is 70. There are people though that choose a set period of time instead of looking at retirement because it is often linked to the expected repayment date of a mortgage or other finance agreement. Also you are not usually tied to the policy during that period, but the protection will remain in force as long as you are continuously meeting your premium payments.


How long is the benefit term?

The longer you want the policy to have the delivery of the pay-out or benefit term, the more the premium is likely to cost. Short-term income protection policy is designed to give you with payouts if you are unable to work for a set period of time, normally between 6 to 12 months. On the other hand, Long-tern income protection insurance can give you a cover if you became really ill and you will not be able to work again.


How about the benefit amount?

The amount of cover you need will be dependent on your situations and it is important not underestimate or overestimate the amount. Usually the maximum amount you can get through income protection is about 70% of your gross monthly earnings and the payout is typically tax free. You also have a choice to insure a lower percentage than that if you want your premiums to be lower.


What are the types of policies?

  • Guaranteed policy – premium you pay stays the same for the duration of the policy term.
  • Reviewable policy – reviewed by your provider at regular intervals, most of the time annually, which tends to increase your premium every year.
  • Age-related policy – your premium will increase each year in line with your age but you will know how much.


Will gender affect my premium?

Before gender plays a major role as women tend to pay more because they are more at risk to illnesses like breast cancer and other pregnancy-related illness, but a law was passed to make it illegal use gender as a basis in determining premiums.

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