Income protection is a policy that passes the risk from the person who buys the policy to the insurer. This insurance allows a person to recover from an injury or illness without having to worry about any financial problems during that period. |
The income protection policy pays the injured person 75% of his/ her wage or salary until he/ she can get back to work. There are also policies that have to pay this amount of money two to sixty five years since the accident or physical problems occurred. Moreover, there are certain types of injuries that this policy is valid for. This all depends on what cover the beneficiary decides he/ she want.
One of the most important steps when buying a policy is to establish the cover that you want. Once a person has decided he/ she want to go ahead and buy income protection, then he/ she must decide how advanced the cover must be. This decides the value of the premiums and will also make a big difference in how expensive your policy will be.
There are four major elements in income insurance policy. The first factor in income protection policy is the waiting period, in translation how long before you receive your money after you have suffered the accident or illness. This factor is closely linked to the price of the policy. If the waiting period is short, then the policy will be expensive.
The second factor that is of high importance in income protection is the maximum period of time you want your money to be given to you after the waiting period is over. Normally, these types of policies pay these benefits for two or five years or until that person has reached the age of 65. However, if you recover from your injury or illness in less then the period of time specified in the policy and are able to go back to work, you can do that. As soon as you start working again, the monthly benefit ceases immediately.
The third important aspect in income protection is the client’s occupation. Depending on this occupation, the company will pay a higher or lesser premium. And last but not least the fourth important aspect that you have to consider when buying an insurance protection policy is if you are a smoker or not. If a person is a smoker or at least he/ she has smoked over the last year, then he/ she will have to pay more than a non- smoker.
These four aspects are very important to you and will determine the expensiveness of your income protection policy. If ever you have any questions about aspects of your policy, then you have to ask your broker to clarify them for you before you buy the income protection insurance. After every aspect has been cleared and you understand your obligations and your rights, you have nothing more to do than to relax knowing that if ever any problems, your financial side is covered.
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