The greatest asset that you will own is not your shares, funds, properties, motor vehicles or artworks, but your ability to employ your experience, training and knowledge to generate an income. Unluckily, you cannot turn back if your capability is limited permanently and you might find yourself in a position where you can be dependent on other individuals for the rest of your life in order to survive.
Income protection is considered as the most essential component in any individual financial portfolio, followed by life cover, investments, critical illness benefits, as well as other financial items.
Kinds of Incapacity Benefits
For Permanent Conditions
Your income is replaced by the insurance agencies subject to specific constitutional limitations until you reach the age of 55, 60 or 65. These constitutional limitations typically assigned a limit on the amount that can be paid out at disability, for instance 75% of the claimed earnings. These monthly payouts can be used as a fund for your regular financial obligations until you reach the retirement age and the payouts stop.
For Temporary Conditions
Other insurance agencies also offer temporary or sickness cover if the individual does not have the ability to work for a short period of time. A maximum coverage is specified for which these benefits will pay out.
Occupation Benefits Due to Disability
Similar or Own Reasonable Occupation
This benefit will pay out if you cannot perform your occupation. For instance, if you are a surgeon and you claim for disability the insurance company will pay out even if you still have the capability to become a lecturer in the university.
The payout for own occupation disability benefits are higher as compared to that similar or own/reasonable. But, it increases the possibility of having a successful claim.
Types of Income Protection Plan
There are two major types of income protection plan, the permanent and the temporary protection plans. It is recommended that you take advantage of these two plans since there are lots of benefits that you can get from it. The temporary plan will provide benefits for a shorter period of time. The maximum payout that you can get once you cannot work is equal to twenty four months.
The other type is the permanent protection plan. With this kind of plan, the income protection will continue until the retirement time. The Income Protection that you can get in permanent plan is lower as compared with temporary plan. The best thing is that you are secured if you decide not to go to work.
There are several types of Income Insurance Protection plans such as the Disability Income Protection plan, Functional Impairment Cover Plan, Travel Insurance, Serious Illness Protection Plan, Comprehensive Disability Benefit and Life Insurance. The disability insurance plan can be used when a person has a serious or an accident illness which stops a person from coming back to work. This coverage protects the individual by providing income to replace the loss of jobs.