Is Income Protection Insurance Worth The Cost?
Are you ready for the question of the day? Is income protection insurance worth the cost? The answer is a resounding yes. This holds particularly true for people who would like to be proactive about guarding against the fact that you may very well end up incapable of working at some point in the near or distant future. Although you may be young and or fit and healthy at the present time, you just never know if or when you will miss work for an extended period due to an illness, accident, or other unfortunate life event.
The vast majority of people would struggle greatly to keep
up with their expenses such as the mortgage or rent, automobile payments, and
even utilities if they lost their income due to an illness or accident.
Although it may seem like a waste of money at first, an income protection
insurance policy, which is otherwise referred to as sickness insurance or
disability insurance, is a long-term insurance policy. In essence, it ensures
that you will receive a regular income until the time that you are able to
return to work or you retire.
So,
how does income protection insurance work? First and foremost, the policy
provides you with regular payments that replace a significant portion of your
income if you are unable to work due to an illness or accident. The income
protection insurance pays out until the point where you can start working
again, retire, pass away, or reach the end of the policy term. You may not be
able to work for months on end or even for multiple years. In fact, the average
person misses work for three (3) years due to a serious illness or major
injury.
That's
certainly a long time to go without an income. On average, the income
protection insurance policy will pay you anywhere from 50% to 70% of your gross
income. It also covers the vast majority of illnesses that leave people unable
to work in either the short term or long term. In addition, you can claim as
many times as you need to until the policy ends. It should also be noted that
there is usually a deferment period prior to the start of the payments. For
example, you may need to wait 4 weeks, 13 weeks, or even 26 weeks or longer in
order to start receiving payments.
However,
you determine the waiting period when choosing your policy terms. The longer
you wait for payments the lower the monthly premiums will be. Insurance happens
to be one of those products that you keep paying for month after month and year
after year with the hope that you never actually need to use it. The insurance
companies hope that you never need to use it as well. They would much rather
continue to collect your money month after month and year after year without
having to make any payouts.
In
fact, if you never make an insurance claim in your entire lifetime than you are
the definition of a perfect customer. It's due to customers like that as to why
the insurance companies can continue to afford to own the tallest buildings in
cities across the country. However, the vast majority of people end up making a
claim at some point or another. Even if you feel like you're paying more for
insurance than you are receiving in return it's there for the what ifs in life.
For
example, what if you are the cause of an automobile accident? You need an
automobile insurance policy to cover the damages to people and property. What
if you own a business and an employee is hurt on the job or a third party is
injured when visiting your place of business? You need a business insurance
policy in place in order to cover those damages as well. What if a tree falls
and crashes into your house causing tens of thousands of dollars in damage? You
need a homeowner's insurance policy in place so that you don't need to go out
of pocket to pay for the repairs.
The
same holds true with income protection insurance. Just like you carry insurance
to protect your automobile, business, and home you can purchase insurance that
protects your income. Most consumers have only heard of this type of insurance
because of those Aflac commercials. However, only one (1) out of every nine (9)
people actually have an income protection insurance policy in place. The bottom
line is that if you become too sick or injured to work, income protection
insurance can go a long way in helping to replace your paycheck.
Some
people are under the false impression that their medical insurance will pay
their bills when out of work. Medical insurance pays your doctors including
hospital bills. However, income protection insurance pays you. In essence, it
enhances your financial security. You don't have a crystal ball. You certainly
cannot foresee into the future. That means you never know when or if you'll end
up having an illness or accident that disables you to the point where you
cannot work for an extended period of time. However, you can ensure that your
income will be protected just in case you are ill or injured.
