How can Income Protection Insurance protect against the loss of income?
In my opinion, a question I should be asked a lot more. What I’ve realized is that people either have not thought about this possibility or are unaware of the solutions available to them.
Most expatriates only highlight a few areas of their insurance needs, namely health and life insurance. Obviously, both are very important but what happens if you are unable to work, are you able to financially support yourself and continue your lifestyle for 5 or 6 years?
For many, the answer is NO. So, I think you’ll agree, it is worth taking a look at.
The solution to this question is Income Protection Insurance.
How does Income Protection Insurance work?
Income Protection Insurance provides you with a regular monthly income when an illness or injury prevents you from working and therefore receiving an income.
Many providers will also offer a rehabilitation benefit, meaning, if you return to work on a part time basis and receive a reduced salary (due to a disablement) you are eligible to claim a rehabilitation benefit. This is designed to cover the shortfall in your salary.
Will I get the same amount as my salary?
No, the vast majority of insurers will only insure 75% of your annual income until the age of 65. However, this is better than not having a salary.
Do I get the insured amount as soon as I am unable to work?
No, when signing up for income protection insurance you will choose a deferment period. After the deferment period has passed, you will receive the insured amount (monthly income). Typically a deferment period is either 3 or 6 months, a policy with a 6 month deferment has a lower premium/price.
What is the premium/price dependant on?
A variety of factors; age, country of residence, profession and your current health. The insurer will want to assess what risks are associated with your profession and what medical conditions you have had in the past.
The benefits of buying income protection insurance is very clear. However, few individuals actually think about this topic until it is too late. At this stage, they are out of work (due to illness) and begin using their savings which they had designated for alternative purposes, such as, retirement, children’s university fee or a house by the sea.
If, you would like a quote on income protection insurance. Get in touch!