Don’t Risk a Life without Protection

How are you doing on those New Year’s resolutions so far? Are you keeping your promise to get in shape or give up smoking? We make these resolutions because for a moment we are thinking about our future and how we want to make sure that we will actually live to see the future we are trying to protect. It is no secret that many people live paycheck to paycheck and if a case of foul luck should befall you, it makes sense to ensure that you can still have the security of an income.

If you haven’t heard of income protection insurance or are unsure of how it works, here’s a little bit of an explanation. First, income protection is not unemployment insurance and it is not an excuse for taking extended sabbaticals from your job. This protection exists when you are unable to work for extended periods due to an accident or an illness.

For a moment you may be thinking that this is unnecessary if you’re the type of person with a safe and cushy office job. One bad flu bug, a crippling carpal tunnel injury, or an office team building retreat gone horribly awry, and you could be out of work for an extended amount of time.

 
You may receive a level of pay, such as disability benefits, but if they do not meet the amount of income you have come to rely on for your day to day life then income protection insurance will help to cover some of the loss. The protection will help cover up to 75% of your normal income when taking into account your income from all sources such as from disability pay.

Arguably the greatest advantage of the payout from income protection is that it is tax free. The payments happen regularly, often monthly or weekly so you never have to go too long without a source of income. And as long as you continue to pay the premiums the insurance company cannot cancel the policy.

These are not long term solutions to supplementing your out of work income. Most income protection insurance plans offer coverage up to a maximum of one to two years. Many policies even offer options so that you can tailor them to whatever your needs may be.

Before you make any decision involving the choice to have income protection insurance you should seek out the advice of a professional insurance advisor. When you have all the information available to you then you can be comfortable that the choice you make will be the best one.

The cost of having income protection insurance is not something that excludes all but the wealthiest. It can be very affordable with options to pay the premiums monthly or annually. The amount of your premiums calculated based on your income over the last twelve months.

This may sound like it is preying on paranoid behavior. The truth is you want to make sure that in the event something does happen you have a safety net to fall back on. Just as many people are saying that having private health care is a better option than the nationalized Medicare, having income protection is so affordable that it is better to have it and not need it than need it and not have it.

Hopefully you will work long and prosper, but if something takes you out of the daily grind then hopefully you had the foresight to take care of yourself.

Dennis Aimes is a freelance writer and financial advisor who helps people find proper income protection insurance from AAMI. In his spare time he can often be found chasing his dog down the street after another daring and successful escape.