When you are sick or injured the last thing you want to stress yourself about is whether you have enough finances. This is why income protection is an essential protection policy for anyone who is working and has dependents who rely on them financially. Here is a guide on how income protection can cover you when you are sick or injured.
Protecting your number one asset
In order to keep your lifestyle going when you are unable to work due to an illness or injury, you would want to keep your number one asset protected. According to a report that was released by Commonwealth government, private sector and not for profit organisations found that 786,000 Australians experienced a health condition that required them to take time off from work and income support either from the government or private source in the year 2015-16.
There were at least 6.5 million people who accessed sick leave for short-term illnesses. Without the proper safety net in place in terms of an income protection policy or other policies that can provide for you, it can leave you exposed and set you up to be sucked into a debt spiral.
How can income protection insurance help you?
Income protection is a type of insurance that can help replace your income if you are unable to work for a certain period of time due to a serious illness or injury. Depending on the type of policy you have chosen you can be paid a monthly payment of 75% up to 85% to keep your lifestyle going even when your salary has stopped. It is vital that you check the period of how long your policy will be able to cover you. Some policies can only cover you for a period of up to two years.
What can income protection help you cover?
Income protection policies are designed to be the right fit for you so that you can continue life without having to find ways of patching up your expenses. It can cover things such as everyday expenses, medical expenses, and long-term debt. It can also be used to cover:
- Your mortgage
- Medical expenses
- Cost of a carer
- Cost to take care of your family
However, you should be aware that some policies might not cover you if the reason you are unable to work is that you have been made redundant. You will have to compare to find a policy that will cover you for redundancy.
What else can it cover you for?
There are some features that can come with your policy and some that are extras that you can add to your policy. Just keep in mind that this could possibly increase your premiums. For example, income protection can cover you for illnesses that happen during and outside of work. You can use it to help you cover rehabilitation expenses or an elective surgery. If it happens that you need to travel to receive adequate medical care, there are some policies that can keep yours or a spouse’s accommodation costs covered.