Income protection insurance is a type of financial policy that preserves your current monthly income amount in the event of long-term sickness, illness, disability, or unemployment. Income insurance is not available for those on short-term disability. You must exhaust your short-term disability before experiencing long-term disability benefits. Income insurance can be thought of as a long-term disability plan. Short-term disability insurance allows a person to maintain a constant income for up to six months; after this, however, your income decreases by one-third if he or she does not purchase a long-term disability plan. Income protection insurance ensures that your monthly income will remain the same, regardless of unemployment, the job market, or the improvement or deterioration of your physical condition.
You can receive income protection benefits up to age 65; in some cases, you can receive protection benefits up to age 70, what many consider to be the retirement age. Should your insurance company allow you to access benefits five years beyond the majority maximum (65 years), you will likely see an increase in your monthly insurance premium. If you are still under the maximum age limit, you can receive anywhere from seventy-five to eighty-five percent of your annual gross income (yearly salary) from an income protection insurance plan. Most receive seventy-five percent of their gross income, though some can receive up to eighty-five percent—should they possess retirement benefits.
Who qualifies for income protection? A person who has a physical injury that impedes him or her from doing their normal job and working normal hours qualifies for income protection. A person that has applied for work and does not know when he or she will be hired for a new job will need to have income protection. The unemployed individual can in no way, shape, form, or fashion predict when a job will open, or an employment situation will arise. Unemployment is an unpredictable factor when it comes to qualifying for income protection.
Income protection insurance comes in three different types: indemnity value insurance, agreed value insurance, and guaranteed agreed value insurance. Guaranteed agreed value insurance allows you to preserve your monthly income amount without filling out the necessary paperwork or traversing through routine protocol. There are very few insurance companies that offer these policies, though you will pay a hefty monthly premium if you should select a guaranteed agreed value plan. Indemnity value insurance is a form of cheap income protection insurance whereby you pay the lowest monthly premium to preserve your income. Despite the low cost of indemnity insurance, however, there is a price to pay: for the most inexpensive insurance, you face the chance of losing a portion of your income each month. Indemnity value insurance maintains your income as long as your company does not reduce your income or the market remains stable. If your company decides to reduce your occupational income, you will feel it in your pocket each month.
Indemnity insurance protects you as long as your income remains the standard income amount at your place of employment. If you experience a reduction of your monthly income, you may feel that indemnity insurance serves little (if any) purpose at all. Agreed value insurance, however, is more stable than indemnity insurance. Agreed value insurance promises to preserve your income at its current amount, regardless of what happens. Market instability, occupational income reduction, or other financial decline will not affect your income. If you make $4,500 a month now, you will continue to make $4,500—despite economic changes that occur around you. Agreed value insurance, while preserving your income, does come at a cost: it will cost more to purchase agreed value insurance than indemnity insurance. There is a positive, however—both insurance plans are tax deductible.
If you are interested in obtaining income protection insurance, you need to find an income protection insurance quote that will provide some idea of what your monthly premium could be. To obtain an income insurance quote, you need to find insurance companies on the Internet and in your area that provide income protection for long-term disability patients. If you decide to use the Internet to find an income protection plan, you can type in “income protection plan” by way of Google search and read about the various insurance companies and their policies. Be sure to read thoroughly and research carefully before you choose an insurance company. Even after you think you have found the ideal insurance company from which to purchase your income protection, you still need to research the insurance plans your particular company offers. If you aim to find insurance companies in your local area, visit the companies on-site and talk to insurance agents at each company about their income protection plans and premiums. You want to make sure that you get the most for your buck.
To compare income protection insurance is a personal matter, indeed. Some individuals will choose an at-risk policy (such as indemnity value insurance) to conserve their monthly expenses. Others will choose a non-risk policy (agreed value insurance) to protect their annual income. If income protection policies are tax-deductible, it will not hurt to purchase the agreed value insurance plan and pay its monthly premium. This way, you stand not only to deduct the plan from your taxes (and thus, save money), you will also protect your financial welfare for years to come.




