If you don’t have that much money coming in, you may think twice about shelling out for insurance. Paying insurance premiums can seem unnecessary when you have so many other financial obligations to fulfill. However, protecting the income you do have with income protection insurance could be best decision you ever make.
What is income protection insurance?
Income protection insurance basically protects your income. If you become sick or injured and are unable to work, income protection insurance can provide an income when you no longer have a paycheck coming in.
While different insurers have different regulations, you can usually insure up to 75% of your income. That means you would receive the equivalent of 75% of your paycheck in the form of an income protection insurance benefit if you were no longer able to work.
You can choose how soon your benefits start after sickness or injury stops you from working, and you can usually choose how long you want the benefits to last. Longer benefit periods that start quicker will usually cost more in premiums.
When would you need income protection insurance?
Your paycheck probably covers your rent or mortgage payments, any bills, loans or credit card repayments, as well as day-to-day expenses, such as grocery bills and petrol. If your paycheck were no longer coming in, how would you cover those expenses?
Income protection insurance can offer a “substitute” paycheck for a certain period of time, helping to cover many of the expenses your regular paycheck would cover. This can help you get back on your feet quicker, without the financial stress of worrying how you are going to pay for everything.
It can also prevent you from having to take out a loan to cost everyday costs, and getting yourself into debt.
Do you need income protection insurance if you are on a low income?
No matter how high or low your income is, if you rely on your income day-to-day, then it’s a good idea to protect it. Protecting your income with income protection insurance can help you if you are no longer able to work, and can negate the need to take out a loan or rack up debt when your paycheck is no longer coming in.
Finding the right income protection insurance
There are numerous policies out there, such as Suncorp income protection, it’s simply a matter of finding the one that works best for you. Compare your options online, and research what’s available. Think about how much cover you need, what the policy offers, and be sure to read the small print before you sign up.