Most of us insure our vehicles, homes and personal possessions against circumstances that could result in financial loss. Many of us have life insurance that will ensure that our families are financially secure in the event of our untimely death. But how many of us consider the consequences of a loss of income? What would happen if you were to become ill or suffer an accident that left you unable to earn a living?
Income Protection is an insurance which is specifically designed to cover a loss of income brought about by a protracted illness or injury which prevents you from earning an income.
This insurance should not be confused with health insurance. Income Protection is intended to ensure that you can continue to service your debts and pay for everyday living expenses when you are unable to work. In a nutshell, Income Protection offers you financial security when you are vulnerable. After all, when you are ill or injured you should concentrate all your efforts on overcoming your health problems not on how you will cover your monthly expenses.
Income Protection can cover as much as 75% of your earned income after social welfare payments are deducted.
The premium that you pay for this insurance will be determined by your state of health, your age and your occupation. If illness or injury prevents you from working, the income protection will pay out a substitute salary until you are well enough to return to your job or until you retire whichever happens first.
Income Protection offers a range of choices that you can use to tailor the benefit to suit your lifestyle requirements. You can also make changes to the plan to fit life’s changing circumstances.
Categories of Income Protection
Executive Income Protection
The Executive Income Protection is designed for employers who want to offer senior staff, such as directors, income protection. Claims against the insurance are paid to the employer who will then pay the employee through their payroll after making the usual deductions. If required, the plan can also include pension contributions. Payments constitute an allowable business expense for the purposes of corporate tax calculation.
Individual Income Protection
Individual Income Protection is available for self-employed people or for those that require protection in addition to that provided by their employers. The taxman offers relief on premiums paid at marginal tax rates. Claims will be paid out directly to the insured after the required deductions are made.