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 Blog 