March 1, 2011

Understanding The Income Protection Insurance

Understanding The Income Protection InsurancePeople face problems everyday and most of these problems are unforeseen. Unemployment and illnesses are some of the problems that happen in every minute across the world. Insurance companies have taken the initiative to protect people against such risks. Income protection insurance is meant to pay a person the same amount of money before unemployment or an illness that made a person unable to work.

A company might fold at any moment and this means that the employees will be out of good jobs. A company can also decide to lay off employees because of financial problems and unfortunate employees will be jobless. This happens almost everywhere and the issues affecting unemployment are many and unforeseen. Illnesses that prevent people from working mean that a source of income has been cut off. Employers do not want ill employees in their company because it is illegal and secondly, they will be unproductive.

Insurance companies have found new ways of helping people deal with unemployment. A person contributes premiums and when the risk occurs, the insurance company pays for non-taxable income that will be the same as when a person was still working. This contribution is usually calculated as 50%-65% of your total earnings before paying for tax income.

When unemployment is a risk, the insurance will pay for the specific time allocated. This means that it is a short-term cover of about 12-24months and after that period of time, the insurance company stops paying. This short term coverage is usually meant to help you get on your feet and search for another job without suffering the financial instability unemployment causes. You have one year or two to look for a job and this can be one of the best things because you will take your time to really research on the perfect career after your previous job. This short term covers are also meant to cover for a mortgage loan, a car loan or credit line repayment that would have landed you in court if you did not have a good financial back up. Learn about Total & Permanent Disability. Also make sure to visit Buy AIA Life Cover.

Long term insurance cover does not cater for unemployment. It however covers for the moment your sick pay is stopped by your employer to the moment when you start collecting your pension. This can be a very long time and the cause can be a fatal illness that needs a lot of money for you to live a normal life. This income depends with how much you are willing to contribute and it can be in contract form of 5years, 50 years or even 60years.

For people who are single and have no dependants, this can be the best insurance because it meets all costs of living in case of an illness as compared to ensuring that beneficiaries get a good payout after your death. This insurance has been designed for the purpose of protection against illnesses and unemployment which means that it takes care of those insured as compared to beneficiaries. Life is more important and preserving it is what this form of insurance does.



  1. An income protection is certainly a type of coverage that every working person should invest in. You may resent having to pay a monthly premium but at least you know you wouldn't have to worry about financial difficulties if you cannot work due to illness or injury.