What Is Income Protection Insurance?

What Is Income Protection Insurance?

Ask yourself this: What would happen if you had to stop work suddenly because of an accident or illness? What about your bills and financial obligations? Could you afford to pay your debts and enjoy your current lifestyle?

Knowing you have a reliable, ongoing income stream in the event that you are temporarily unable to work because of injury or sickness gives you enormous peace of mind.

Income Protection Insurance provides you with a monthly benefit of up to 75% of your income if you can’t work due to sickness or injury, regardless of whether you’re self-employed or work for someone else. The benefit can help you maintain your lifestyle while concentrating on recovery. And the good news is that your premiums are usually tax deductible.

Waiting Period

Income Protection Insurance is different to other Risk Insurances because your premiums are determined by your waiting period. The waiting period is when you need to be unable to work before the insurer starts making payments.

If you opt for a longer waiting period and can support yourself before your benefit kicks in, your premiums will be lower. While some choose a very short waiting period of as little as 14 days, others are confident they can cope with a short period off work and prefer a longer waiting period.

Your premiums are usually lower for longer periods off work chiefly because the insurer is less likely to have to make a payment straight away. And because short term illnesses and injuries are more common.

Benefit Period

When applying for Income Protection, you can choose your benefit period. The benefit period is the amount of time the insurer pays your benefit. It can be as little as two years, or you can choose to receive benefits up to the age of 60, 65 or even 70 in some circumstances.

Do I Need Income Protection Insurance?

Being without a source of income while you recuperate only adds to an already stressful situation. Income Protection Insurance needs to be seriously considered if you or your loved ones would suffer financial hardship if you could not work. So, unless you have some form of reliable ‘passive income,’ Income Protection Insurance should be a critical component of your personal financial plan.

How Do I Arrange Income Protection Insurance?

As with other Risk Insurances, the best way to take out Income Protection Insurance is to talk with a financial adviser. They can help you calculate the amount of insurance appropriate and advise on the benefit period and the waiting period. Your adviser will also help you select a reputable insurer with a good record of paying claims when the time comes.

What Happens if I Need to Make a Claim?

Take the stress and uncertainty out of claiming by asking your financial adviser to arrange it for you. They’re the experts when dealing with insurance companies and can ensure that everything runs smoothly and that they will pay your claim as quickly as possible after the appropriate waiting period.

What do I need to do now?

Riviera Wealth Partners provide tailored Financial Planning and Insurance advice to safeguard you and your family’s financial future.

For more information or to see how Income Protection Insurance can help you, please contact us. If you have existing Income Protection Insurance cover, we can review your policy to make sure it’s still suitable for your circumstances now and that it’s still cost effective for your overall financial goals.