Income Protection insurance – A Look At The Idea

The concept of insurance has been there since the time civilization began to take its root, but income protection insurance is rather a modern notion.  The policy is solely meant for the earning members of the society. It is true that most policies, which are sold in the market, are life insurance policies, but in this modern age one needs something more than that and income protection scheme is one of them.

What is Income Protection Insurance –

The words income protection tells a lot regarding the policy. It offers the policyholder protection, just in case there has been a loss of income due to sickness or accident related issues.  However, here is a word of caution for the policyholder. This is not an alternative to unemployment. The policy is certainly not a cover for lost jobs due to dismissal or criminal actions.

http://www.youtube.com/watch?v=PRnnlIAwF18

From Where To Buy Income Protection Cover –

Now the next focus is from where to buy income protection Preexisting Medical Conditions cover. There are plenty of insurance companies selling the policy and with most of them having online presence, locating someone should hardly be a worry.  The quotes or to be precise lower premiums are certainly a criterion. Nevertheless, the record of a particular firm in regards to claims payments should certainly receive focus. After all, the whole issue of buying protection is to receive benefits just in case there is a financial crisis. The amount of benefit too should get proper attention.

Why The Payout Is Limited To 70% Of The Last Income Drawn –

In general, the idea is to encourage the patient to get back to work. However, if the monetary payment exceeds the client’s income, then few will want to go back to work. Hence, on most instances, insurance companies try to curb the payout limit to 70% of the income. One can always do a comparative study of the offers  and then choose accordingly. To get a better deal, one can even consult insurance brokers. They are not attached to any insurance company. Hence, they will certainly offer the best.

What Is Deferred Period –

The deferred period is another area to focus on.  It is the period in between a claim and commencement of benefits. The longer is the period; the lower is the premium to be paid. However long deferred period may create trouble for those with limited saving and hence one should ponder over such points before picking up a income protection insurance.

Income Protection Insurance Provide Benefits Even If The Injury Is Not Work Related

Employer Sponsored Coverage Is Not A Substitute For Independent Income Protection Insurance –

We have all heard about income protection insurance schemes; but very few of us make any concrete attempt to get such coverage. Moreover a large section of American workforce believes that since the employers are bound by state laws to provide compensation in case of illness or injury, they need not buy additional coverage. They however, fail to remember that to get compensation under such schemes the injury or illness has to be work-related and in good many cases they are not.

Indeed, it often happens that the main breadwinner of the family loses his job because of some accident or illness which is not at all work related and when this happens, he/she does not know where to turn to.  One has to keep on paying bills and as the savings dry up that becomes more or more difficult. However, with income protection coverage in place, it becomes least of worries. If chosen with care, such schemes pay as much as 75% of the last income earned in monthly installments; if used prudently, such an amount should meet the requirements adequately.

Income Protection Insurance: Some Salient Points –

It is to be noted that income protection schemes are generally stop gap measures designed to help the incapacitated to lead his life with dignity. That is why it pays only 75% of the last salary drawn. Any higher amount will encourage complacency and the person will never try to get back to work. In fact, most carriers have rehabilitation programs to encourage the insured either to go back to his old job or to find jobs that are suitable for his/her present condition.

One more point to remember is that there are three categories of income protection plans. The long term policies extend coverage until the insured reaches the retirement age. In other words such plans cover the whole of working life of the insured and keep on paying benefits until one reaches 65.  Contrarily, short term plans are designed to provide benefit over a specific period only; such plans are naturally more cost effective. There are also exclusions to look into.  Indeed, before choosing specific income protection insurance, one has to keep a lot of things in mind.

Income Protection Insurance And Its Benefits

Income Protection Insurance And Exclusions –

The concept of income protection insurance is certainly a new idea. This is a policy aimed at protecting people just in case there is a loss of income due to some major sickness or accidents. However, it is important to note that the policy does not cover loss of income due to dismissal or retrenchment. The benefits are payable only if the insured loses his/her income due to disability. Moreover, in most cases, incapacitation due to substance abuse or self-inflected injury is also excluded.

Points To Focus On Before Purchase Of Income Protection Insurance –

1. Nevertheless, in spite of the fact that it does not cover dismissal, it is certainly beneficial for people who have a stable income. Just in case, there is some unforeseen danger in terms of sickness or injuries, this acts as a perfect financial protection. Fortunately, such protection is offered by many well known insurance carriers. One can always do a comparative study of the premiums the insurer charges and the amount offered as benefit. While it makes sense to go for those who offer cheaper alternative, one must also focus on the record of the insurance company in regards to claim payment.

1. The amount of benefit is also an important area of focus. The idea is to get the patient back to work.  Hence, most insurance companies offer an amount, which is lower than the income of the insured person, or else he/she will not want to get back to work. Moreover, such payments are mostly made in monthly installments and this too us an added advantage. One can budget one’s expenses accordingly.

The deferred period is also another important aspect. In insurance parlance, the time between the submission of claims and receipt of payment is known as deferred period. People with strong finances can look for a lengthier deferred period because that may reduce the premium quite drastically. Indeed, income protection insurance is beneficial, but one can get the best advantage out of such policies only if it purchased after due deliberation.

Income Protection insurance – A Look At The Idea

The concept of insurance has been there since the time civilization began to take its root, but income protection insurance is rather a modern notion.  The policy is solely meant for the earning members of the society. It is true that most policies, which are sold in the market, are life insurance policies, but in this modern age one needs something more than that and income protection scheme is  Preexisting Medical Conditions one of them.

What is Income Protection Insurance –

The words income protection tells a lot regarding the policy. It offers the policyholder protection, just in case there has been a loss of income due to sickness or accident related issues.  However, here is a word of caution for the policyholder. This is not an alternative to unemployment. The policy is certainly not a cover for lost jobs due to dismissal or criminal actions.

http://www.youtube.com/watch?v=PRnnlIAwF18

From Where To Buy Income Protection Cover –

Now the next focus is from where to buy income protection cover. There are plenty of insurance companies selling the policy and with most of them having online presence, locating someone should hardly be a worry.  The quotes or to be precise lower premiums are certainly a criterion. Nevertheless, the record of a particular firm in regards to claims payments should certainly receive focus. After all, the whole issue of buying protection is to receive benefits just in case there is a financial crisis. The amount of benefit too should get proper attention.

Why The Payout Is Limited To 70% Of The Last Income Drawn –

In general, the idea is to encourage the patient to get back to work. However, if the monetary payment exceeds the client’s income, then few will want to go back to work. Hence, on most instances, insurance companies try to curb the payout limit to 70% of the income. One can always do a comparative study of the offers  and then choose accordingly. To get a better deal, one can even consult insurance brokers. They are not attached to any insurance company. Hence, they will certainly offer the best.

What Is Deferred Period –

The deferred period is another area to focus on.  It is the period in between a claim and commencement of benefits. The longer is the period; the lower is the premium to be paid. However long deferred period may create trouble for those with limited saving and hence one should ponder over such points before picking up a income protection insurance.