When you’re unable to go to work due to an injury or illness, or if you are laid off, income protection insurance can help you financially. Short-term and long-term insurance coverage are also available.
Why You Need it?
With savings or a sufficient redundancy payout, you may be able to cover part of the costs of sickness if you’re laid off from your job. You’ll still be able to maintain your standard of living and pay your expenses if you don’t have a steady source of income. Nevertheless, keep in mind that it will only cover a portion of your income, up to 70 percent of your wage, when you take out the policy.
Short-term or long-term income protection
Sickness and injuries are usually covered under long-term unemployment insurance. It pays out as long as you are able to work again, or until you retire, die, or the insurance is terminated. Even if you’re laid off for no fault of your own, you may be covered by short-term income protection for up to a year.
Types of income protection insurance
Income protection policies come in a variety of shapes and sizes, so consider what you’ll need from yours before making a decision.
Accident, Sickness and Unemployment
For those times when you’re too ill or wounded to work, or if you’ve been laid off, ASU is an income protection insurance coverage. In the case that you are unable to continue working due to one of these causes, you will receive a monthly payment equal to up to half of your regular wage.
There are only short-term benefits, usually between 12 and 24 months, so you have time to look for another job or make long-term plans if you’re unable to work any longer.
Loan protection insurance
You may use it to cover your debt repayments in the event that you become unable to work. It’s also known as loan compensation claims, and it may safeguard you if you get ill or lose your job. There is insurance available that will protect you against all of the aforementioned dangers.
An insurance policy for debt protection will provide you with monthly payments if you become unable to work. Instead than being tied to a single obligation, as with PPI, loan protection may be used to pay off any debt you want, including your mortgage or credit card payments.
Payment protection insurance
If you cannot earn an income, payment protection insurance (PPI) will cover your monthly debt obligations. Disability, injury, or involuntary unemployment are all possibilities for this situation. Up to 70 per cent of your yearly income is often covered by PPI policies, and you may get up to 12 months of payments in the event your claim is approved. Policy conditions will, however, vary.
This is entirely depending on the specifics of your situation. PPI may be a good idea if you’re concerned that you won’t be able to meet your current debt payments in the event of a job loss. Savings or protection from another policy, such as critical sickness insurance or loan protection insurance, may eliminate the need for this additional coverage.
Mortgage Protection Insurance
As a kind of income protection, mortgage payment protection insurance covers your mortgage payments in the event that you are made involuntarily redundant or lose your job because of an accident or sickness. As long as your monthly repayments do not exceed 65 percent of your gross yearly wage, MPPI will cover all of your monthly payments. It is applicable to both payment (capital and interest) and interest-only mortgages. After 12 months or until you find a job again, most policies that cover your mortgage will pay out.
