Life is unpredictable and thus, we should always be prepared for unforeseeable circumstances to ensure that they do not add on to our and our family’s stress levels as long as financial support in concerned.
Understanding Income Protection Insurance
Disability protection coverage is one of the least known personal finance types. So, what is it?
IPI or disability insurance is a policy designed for people who are unable to work or are compelled to take time off from work due to sudden illness, injury or disability. As per the policy, they continue to receive an income so that their financial ecosystem remains unaffected or less affected for that matter.
Moreover, understanding the disability insurance policy is a little complicated because it demands you to understand which type of policy you should opt for, when does the product begin to pay out, how long will it aide you, what kind of disability does it cover and a range of other questions. They say it is because of all these reasons that this policy remains less known.
Types of Income Protection Insurance Policies
There are in essence two different types of disability insurance policies. These are:
* Short-term Income Protection Insurance Policies
Short-term Income Protection Insurance policies are also referred to as accident, sickness and unemployment policy products. These are short-term because these will generally be available to pay out up to 2 years. These are also called ASU policies and are further categorized into two different policy products described below:
o Mortgage Payment Protection that is allows you to make your mortgage payments for a prescribed duration of time.
o Payment Protection Coverage is the one that helps you cover the cost of a certain debt that you have so that you don’t default.
* Long-term DisabilityInsurance Policies
Long-term Disability Insurance policies are available to those who have taken off from work due to illness or disability. This product offers them regular income until the policy holders are healthy enough to resume working or as per the policy tenure.
A long-term income protection insurance policy also has a waiting period or a deferred period you can choose. It ranges from a single day to up to 104 weeks. Under this category, the own occupation policy pays out when the policyholder is not able to do his/her job where the other working tasks policy pays out if you are not able to carry specific day-to-day tasks.
Why Opt for Income Protection Insurance Policy?
It is important to keep finances coming in so that you and your family can keep having a reasonable lifestyle even with your injuries. This will help you to focus on other important tasks like getting better and getting back on your feet so that you may resume work as soon as possible. This is a very good way to cover your daily utilities as well as your children’s education and tuition fees so that you may save societal discomfort and your family’s life remain unaffected.