Income Protection Insurance Plan – Why Is It So Important?

income-protection-insurance-plan-example1 If you are wondering whether an income protection insurance plan is right for you, there is one important question you must ask yourself: How long would you be able to consistently pay your bills and sustain your lifestyle without your regular income? Injuries and illnesses are never planned for, but they could leave you unable to work. Income protection insurance offers you some peace of mind as it ensures you continue to receive an income during your recovery.

Temporary salary

With your income protection insurance cover, you are paid a monthly benefit of up to 75 percent of your regular salary. This would help you meet your expenses including paying your mortgage, children’s school fees, phone and utility bills, food and clothes. It is worth noting that thousands of people make income protection claims each year for reasons ranging from broken arms to long-term illnesses that hinder them from working for any amount of time.

Health problems

Health issues are one of the most common reasons why working-age Australians are unable to participate in the labor force. When you are in poor health, it is difficult to be employed full-time or even part-time in comparison to an individual in good health. In addition, people with persistent poor health tend to receive the lowest wages.

Sick leave

In many cases, employed workers are covered by sick leave if they cannot work, but this is usually 10 days or 2 weeks a year. On the other hand, self-employed individuals do not receive paid leave entitlements. As soon as the sick leave expires for an employee, the employer’s obligation ends and any income you get afterward is your responsibility. If you have personal savings you can rely on, it is important to figure out how long they would last if you suddenly could not work for an extended period.

Workers’ compensation

Even if you are on a workers’ compensation claim, the money you receive may not be sufficient to maintain your lifestyle. Note that depending on the state in which you reside, the compensation payments may drop significantly over time. This would mean that for longer-term claims, you may not have enough to cover your daily living expenses on the compensation payments alone. An income protection insurance plan can therefore act as a supplement to ensure that you have enough money to meet your needs as well as those of your family.

As an individual, your financial needs will differ from those of other people. This is why it is vital to get financial advice before getting your income protection cover. A financial advisor will give you proper information on how you can get income protection, including getting it through your super, click here to know more on how to determine the amount of cover you need as well as the tax benefits you can claim from the same.

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