Income protection is an insurance policy, available particularly in South Africa, Australia, Ireland, New Zealand and the UK. It pays benefits to policyholders who are incapacitated and hence unable to work due to illness or accident. Your ability to earn an income is your biggest asset. Start by asking yourself this question, ” If I lose my ability to earn an income due to sickness or disability, where do I and my family stand.” After asking yourself that question, if you have a frown, you probably need it.
From an insurance perspective, there are three ways of protecting your income, and an ability to earn an income. You can do this by taking out capital disability insurance, monthly income protection insurance or opt for a combination of both.
Capital disability protection insurance will pay a lump sum if you are declared totally and permanently disabled. Monthly income protection will pay a monthly income for sickness, temporarily and permanent disability. Capital disability and income protection is the ideal plan to cover your debts and immediate expenses via capital disability and provide for your ongoing living expenses.
If you are in a car accident or contract a severe illness, which is not deadly but removes you from the working environment for 6 or 12 months. Will you be able to cover the rent, car repayments, bond and additional medical bills and expenses? Income protection will pay for up to 24 months and after that, it converts to permanent disability and will cover you until you reach retirement age.
If you are not employed in a professional or specific occupational capacity, this might be cover you require. This type of protection is for you if you become unable to perform your particular occupation. You might be able to be employed in another capacity that requires physical or mental strain and maybe for a little less income.