Income protection insurance is exactly what the name suggests. This type of insurance is usually designed to pay you a benefit in case you are unable to work for a period of time. This may be because of an illness or injury. It pays you a monthly benefit like your salary. It pays you until you are able to return to work or for an agreed period of time. This insurance policy is being offered in select countries only. This includes Australia, Ireland, and New Zealand. As well as South Africa and the United Kingdom.
People often ask why they should get income protection insurance. People are not usually comfortable with spending significant cash over the long term. It generally covers about 70 to 80% of your pre-tax salary. This offers various benefits.
Mortgage payment
New homeowners commit to a huge debt when they get a house loan. These loans often stay unpaid for years. Some even for decades. Paying off this kind of debt is difficult if you are no longer fit to work. Income protection insurance plays a big role in this.
Other debt payments
Your bills will not stop coming even if you get sick and do not get paid for work. The interest rate of your other debts will also not stop. It is possible to accumulate more debt because of an expensive recovery. Especially if you need therapy or special treatment. Income protection insurance can ease the pressure of managing the said bills.
Recovery focus
Financial stress is something most people avoid. More so when you are recovering from an illness or an injury. Your rehabilitation may take longer because of any stress. Income protection insurance lets you focus on your recovery instead. All you need to think about is your health and how to recover.
Quality of life
Most people do not want a sudden change in their routine and lifestyle. This is inevitable when you get sick or injured. Income protection insurance can ensure you feel better about your situation. You can continue to enjoy the quality of life you had even when unable to work anymore.
Family reassurance
Medical bills are expensive. If you are unable to work then this could pose a problem. Your family members are then left to attend to these expenses on your behalf. Income protection insurance lets you dismiss this worry. Your family will be able to use your policy to pay off your medical bills.
Possible tax benefits
You could claim income protection insurance premiums on your annual tax return. The amount you can claim depends on your taxable income. As well as your marginal tax rate. You should check whether you are eligible to claim this benefit. Keep in mind that you can only claim for the premiums you pay during the financial year. You are also taxed on your income protection insurance payments.
You should learn more about income protection. Make sure that the income protection insurance you take fits your needs. Every person has different insurance needs. Income protection insurance is very helpful. Especially for those who depend on a paycheck to cover for their living costs.