Income Protection Insurance
Unforeseen unemployment, disability, failing health or any problem that leaves you incapacitated and unable to continue working is covered by payment protection insurance. You can maintain your current lifestyle even if you go out of job for a couple of months. There are three conditions that are recognized as eligible to claim for income protection insurance:
- Unable to do your own job
- Unable to do your own job or a similar one for which you are qualified
- Unable to do any kind of paid work
However, there are also some exclusions from this policy like:
- Disability due to, or caused by, HIV/AIDS
- Normal pregnancy
- War
- Self-inflicted injury
- Criminal acts
- Misuse of alcohol, drugs
This insurance is also known as long-term disability insurance or permanent health insurance (PHI). If you are covered under this insurance policy then it keeps paying you monthly if you are unable to continue working and keeps doing so till you recover and go back to work, you die or you reach the policy termination age that is usually 65. Some of the policies go a step ahead. They also offer with-profits or unit-linked investment base that provides cash return on retirement.
In many cases the employer already offer income protection insurance so you need not take out your own policy unless you feel that it does not cover your risks adequately. Another important thing you must know at this point is that the benefits you get from this insurance policy are non-taxable if paid personally but if the employer is paying the premium then the benefits are taxable. The maximum income protection you can get is 60% of your gross income.
Premiums on income protection insurance are higher in case of women and lower in case of those in white-collar jobs. If you are willing to wait for a longer time between unable to work and receiving payments then also you get to pay lower premium. Another crucial factor that decides how much premium you pay is your health and medical history. Before making a decision of which policy you want to buy make sure you have read in between the fine lines. A fixed premium policy is a good idea since you pay the same amount each month for the rest your working life
return to Visitor's Articles |
