Income protection insurance, known as unemployment insurance, is an insurance policy, which is to
cover affected income of the policyholders who aren’t able to work because of
critical illness or accident or losing job. This type of insurance is available
mostly in New Zealand, Australia, South Africa, and United Kingdom.
Having Income protection insurance is
a way to get coverage of day to day living expenses at a time of your recovery
period. If you have this insurance policy, you can easily maintain your
expenses at that moment. This policy can cover 75% of your normal income until
you are able to work as well and if you can’t back to work, it will continue
till you are 65 year old; these benefits are paid weekly or monthly on regular
basis and they also are free of tax. If policyholder pays premiums
continuously, insurance company can’t be able to refuse or cancel to renew the
policy provided.
Whereas some insurance policies offer
higher percentage of cover, you should check them carefully before making a
decision. Depending on conditions, your income protection policy can vary
greatly; waiting period, policy type and benefit period can affect your
coverage percentages. When you consider this policy, you should note something
about income protection such as your age, occupation, and your health behaviors.
It is worth considering that some
restrictions can affect your eligibility for getting coverage by having income
protection insurance. For example, an unemployed policyholder who is out of
illness or accident isn’t able to get benefits of policy. Some exclusion
applies to most policies; no benefits are allowed for illness or accident,
which are arising from any bad events like drug abuse, intentional self-harm,
wars and criminal acts.
Because of the benefit limits, the maximum
payment on regular basis is usually restricted to inhibit moral danger – if the
benefit exceeds the income of
policyholder, then they have a little incentive to come back to work at a time
of their health recovering.
