Income Protection Insurance Explained – All You Need To Know.

Has it ever crossed your mind what life would become for you if you stopped earning like you used to? Because of an injury or illness, you become incapable of fending for yourself and the people dependent on you for a while; this is where Income Protection Insurance comes to play, saving you from such a situation and keeping you on top of your bills and expenses while you focus on recovering. This post will run you through what Income protection insurance is all about, what it’s worth and how it works, and what Income protection insurance covers and what it doesn’t cover. Stay put; it only keeps getting interesting as you read on.


What is Income Protection Insurance?

Income protection insurance reimburses a percentage of your pre-tax income if you cannot work due to disability caused by injury or sickness. This insurance policy helps foot your bills while you concentrate on recovering.


Importance of income protection insurance

Having income protection insurance is essential as it provides you with the coverage you need to continue living your life as usual, even when faced with a situation that renders you incapacitated. Whether you have people depending on your income, this policy will reduce financial stress and help you meet your financial obligation. At the same time, you continue to recover until you are ready to return to work and start earning again.

Income Protection Insurance
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What does income protection insurance cover?

Income protection covers your living expenses if you become disabled due to an ailment and cannot work for an extended period. The cover applies for partial or complete disability, depending on your policy.

Some instances of situations where income protection insurance coverage applies include the following;

  • A case of someone going through chemotherapy and cannot work until they are fully recovered
  • When an individual covered by the insurance undergoes surgery requiring a long recuperation time, they cannot work during this period.
  • A scenario where a policyholder is wounded during a sporting activity, and this injury will require a lengthy healing period.

What doesn’t income protection insurance cover?

There is only reimbursement when the insurance policy covers the situation you are making a claim for. Ensure you are enlightened with the details of the policy’s document, and carefully study the Product Disclosure Statement (PDS) to know what is and isn’t covered in the income protection insurance policy.

Nevertheless, income protection insurance does not cover injury or illness:

  • due to war, civil disturbance
  • A pre-existing ailment that is not included in the policy.
  • It does not cover injury or illness from childbirth or pregnancy.
  • Self-inflicted injury.
  • It does not cover injury or illness suffered by an individual while serving in the armed forces.

Is income protection insurance worth having?

Income protection insurance is worth having if you:

  • If you are a sole income earner, a small business owner, or self-employed.
  • If you have a family to support or people that depend on your earning, It will save you from financial stress.
  • Have a loan repayment or a debt (E.g., a mortgage) to settle, but you are in a situation where you cannot work to clear your debt.
  • If you intend to continue living a life of financial independence even when incapacitated.

Final word

Income protection insurance covers your living expenses when you are not earning as you used to. It provides a monthly income that puts food on your table and foots your bills while recovering from an ailment. Income protection insurance gives you the financial backup you need, provided your claim meets the condition of the insurance policy. 



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