Income protection is a term that most of us heard of, but few actually know the meaning of this term. This article is here to acquaint you with its meaning and what are the reasons why you should need income protection at all times. |
An income protection is a policy. This policy is an agreement between you and the insurer. In case you get sick or you just can not work for a period of time, the insurer has to pay you an amount of money which you had agreed on when you buy the policy. In other words an income protection insurance saves you form financial problems while recovering from an injury or getting better so you can be able to work again. This policy makes it possible for you to cover all your expenses and also be able to keep financial obligations while you stay at home due to physical problems.
An income protection is actually the transfer of risk from a person to the insurer. It means that if you suffer an accident or you are unable to work due to other medical problems, your expenses are covered by this policy. The company that you have bought an income protection insurance with is obligated to pay you seventy- five percent of your salary while you are recovering from your injuries. The period of time that you will receive this money is stated in the policy. Normally, a person receives his/ her money until he/ she can go back to work again. However, there are income protection policies that state that the maximum period of benefit can be two or five years. Furthermore, there are also policies that state that this period of payment is until you reach the age of sixty- five. The period of time in which your financial problems are met by this policy are established at the beginning, when you fist buy this insurance.
This income protection policy can meet all your financial problems while you are unable to work and this is why many people turn to this solution. However not everybody can buy a policy. Unfortunately there are some requirements that insurances companies have before accepting to sign an insurance protection with you. You will have to provide a lot of information to the insurer and based on this information they will asses your case. The insurer must know with precision what are the risks and on what specific terms they will accept these risks.
You have to read the disclosure statement with maximum attention and ask for clarification on every passage you do not understand. It is crucial that you know what you are signing because an income protection policy can meet your financial needs when you are unable to work, but sometimes only in case of certain injuries that are specified in the policy. All you have to do is pay attention to what you are told and make sure you ask for details if you do not understand what you are told. If you follow these simple steps, then you have nothing to worry about and income protection insurance can be gold to you.
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