About 75% of consumer finds it hard when choosing the income protection insurance, and this article is to list out three things to consider when selecting the income protection insurance.
There are a lot of benefits you can derive from it, and most people don’t know what tomorrow will bring either good or bad, for instance, what if you get injured, maybe in an accident or on the job? What if you get sick and unable to work for some time.
Remember that all these sorts of things can be life-changing events that mostly have a straight impact on your household’s future income.
But, you don’t have to worry too much again or feel depressed, income protection insurance will cover that aspect by helping protect you financially in these situations.
Another great thing is that this type of insurance could cover up to 75% of your pre-tax income for the applicable benefits. The pre-tax income used as the basis for calculating your benefit is the income during the 12 months before your claim.
Anything can happen, and this is the main reason for Australians to compare income protection insurance and look at some policy that will provide you the best coverage when you are unable to earn an income due to injury or illness.
Income protection insurance is so important because a lot of Australian’s might eventually come to realize that they do not have enough protective measures in place should they no longer be able to work.
Due to this income protection insurance becoming more increasingly in the country.
3 Things to consider when choosing Income Protection Insurance
In terms of monetary, nothing possible without income, and your ability to earn cash is one of your biggest assets, that is why income protection insurance is very important.
- Sum insured
This aspect base on the higher your amount insured, then the higher your premium will be, which means you will need to find out about how much money you will need to keep up with your everyday expenses.
For instance, you might earn $20,000 per month but you plan on spending $8,000 per month to keep up with your living costs. Following this can significantly reduce the cost of your premium.
- Waiting period
The waiting period means the number of days before you become eligible to claim, and the most frequently chosen period options are 30 days, 60 days, and 90 days.
While the income protection payment is normally made monthly in arrears. Meaning that it had a 30-day waiting period, then your first payment would be 60 days.
The waiting period affects the premium and the report claim that a policy with a 30-day waiting period is more expensive than the same policy with a 90-day waiting period.
- Benefit period
If you become disabled when you are aged 40, it revealed that you will never be able to return to work. If you had a 2-year benefit period, then there is the probability that your benefit payments would stop when you are aged 42.
Moreover, if your benefit period was to age around 65, you would continue to receive benefit payments for an additional 23 years.
Note that selecting a longer benefit period increases your premium due of the potential payout is higher. and be aware that the benefit period is the maximum amount of time you can receive payments, but if you return to work quicker than that, or you get to age 65, your payments will stop.