You can lose your income through various ways, usually no fault of your own. For instance, you may be involved in an accident that leaves you unable to continue working, you can be made redundant in your company or you may get an illness that forces you to leave employment.
When you lose your source of income, it can be difficult to pay for your basic needs or to carry out your primary tasks. However, having income protection gives you a safety net to lean on when you can no longer get income on your own.
Before you buy income protection insurance, check the exclusions in the policy. For example, for most policies, you will not be entitled to a claim if you are in temporary employment, are self-employed, have a pre-existing medical condition or are of retirement age. Providers usually indicate the exclusions in their terms and conditions. Read the policy’s fine print to know what is covered and what is not.
Many providers offer income protection at various terms and conditions. The premiums for the policies also vary. You should shop around and compare different income protection plans to get one that you can afford. However, do not simply go for a plan because it is cheap. Apart from the cost, check the exclusions in the policy. You want a policy that has the least exclusions and will cover you from the first day that you leave work.
A good income protection payout will come into effect from between 31 days and 90 days of your retirement. The amount will be able to help you pay your bills and leave a comfortable life just like you were when you were getting your regular income. The amount you should remit for your plan will depend on your future needs. Typically, the higher you remit, the greater the benefits you will get.
To determine the right amount of income protection you need, check your anticipated future expenses. For example, if you have a family that depends on you, you will need to remit higher contributions to your plan.