Income insurance is a game-changer in helping us get through tough times when things go downhill and we may not have the savings to sustain a living. Acquiring financial stability is imperative to living modestly, and proper financial planning can help us secure our finances for life.
However, many hesitate before applying for income protection insurance due to the lucrative nature of insurance in general and our lack of knowledge regarding the benefits and risks of income insurance.
In this article, we'll help you clear your doubts regarding income insurance by compiling a list of the factors that customers think about income insurance so that you start investing in long-term investments. We will also help you understand how you can benefit from income insurance.
Everyday things people think about income insurance.
1. What is income insurance, and how can I benefit from it?
Let's start with the basics! Many don't clearly understand income insurance and what it's for. Income insurance helps you stay financially stable when you are physically incapable of working temporarily or permanently by providing a monthly income.
Depending on the seriousness of the injury or illness, you can apply for Permanent Disability Insurance or Sickness and Injury Disability Insurance. While permanent disability insurance can help you if you are suffering from a fatal injury or disease that keeps you from earning a living, sickness and injury disability insurance helps you with a monthly income for two to five years.
While the scope for income insurance is broad, one can apply for income insurance only if the insurer can justify the policyholder as incapacitated and eligible for income insurance.
2. What are the implied risks if I don't have income insurance?
We all have a specific cost of living, including the costs of running a household, liabilities, and debts that must be paid off on time. Not applying for income insurance when the time is right exposes you to considerable risk if an accident happens or you lose the capacity to earn a living.
Most adults above 25 have financial commitments, mortgage or rent bills, and unavoidable food and family expenses. Besides, if you have children or parents you need to take care of, with income insurance as a financial resort, you need not face financial hardship and can have a flowing source of income.
Thus, income insurance can act as your passive source of income under such circumstances and help you meet your monthly expenses quickly, ensuring you can meet your basic financial needs.
3. Can I apply for income insurance if I am laid off from work?
No, income insurance only applies to people who are physically injured or unable to earn a living. This means that if you were made redundant at your organization or resigned of your own accord, you would not be capable of being covered by the terms of income insurance.
To be eligible for a claim of income insurance, you need to show medical proof backed by a physician and comply with the insurer's terms and conditions of income insurance. Income insurance is approved only when one is mentally or physically injured and falls under the insurer's definition of inability to earn a living.
4. When can I expect my income insurance to pay out?
- Your income insurance will pay out if three of the following criteria are met:
- Your doctor approves of your inability to resume work and earn a livelihood
- You comply with the terms and conditions of your insurer's income insurance policy
- Once your waiting period is over
If your claim is approved, you are eligible for permanent disability insurance. In that case, your insurer can pay out up to $500,000. If you fall under the criterion of sickness and injury disability insurance, your insurer can provide a monthly benefit amount for an extended period of two to five years.
The payout time also depends on whether you have short-term or long-term coverage, and you will be paid only when this duration is over. An essential piece of advice to remember is to share your medical history and physical condition with your insurer, which highly determines the coverage amount and waiting period. If you are transparent with your insurer, they can align the policy according to your benefits and help you get coverage when required.
5. Is income protection insurance worth it?
Suppose you are debating whether income protection insurance will be worth it. In that case, the right question is whether you can take the hit of the financial consequences you might face if you cannot continue working and sustain your dependents and yourself.
Accidents or fatal injuries are not something we wish upon ourselves or our close ones, but they are as sudden as a storm and can disrupt our lifestyle if not appropriately handled.
Income insurance comes with a comprehensive suite of benefits that can protect your source of income in dire times and offer you the time to calculate your financial moves ahead.
6. What are the things to remember while applying for income insurance?
Income insurance will help you in times of need; hence it only makes sense that you ensure you are thorough with the policy and have complete knowledge of it just as much as your insurer.
Asteya provides complete transparency on income insurance terms and conditions so that customers can be on the same page with the insurer. Here are some of the things that you can keep in mind while applying for income insurance:
- Understand your current financial situation and medical condition.
Being able to map out your finances in advance is advantageous. If you apply for income insurance, you must understand your financial status. For example, if you have a startup or business, your approach would differ from a corporate job that provides sick pay.
Hence, weighing your scope and opportunities is crucial to gaining the most from income insurance. Your medical history and medical condition also play a huge role in determining the kind of coverage you are eligible for. For instance, if you are a smoker, your coverage policies will differ from that of a non-smoker.
- Go through the policy papers carefully.
As the policyholder, you must know what you are signing up for! Hence, you must thoroughly review the policy documents, terms, and conditions instead of blindly trusting what your insurer says or having any misconceptions.
This would only be disadvantageous as you near payout time; hence inquire about it with your insurer, broker, or financial advisor.
The premium is directly proportional to the waiting period.
You must understand how waiting time works. The shorter the waiting period, your premium is higher. For example, insurance coverage with a waiting period of ninety days will cost much less, while the same premium with the same coverages can cost double or more if you choose thirty days.
While choosing the waiting period, it is essential to evaluate how long you can sustain without a job, whether you have access to sick pay and your savings amount. These factors will help you decide and choose the waiting period wisely.
- Benefit period
The benefit period that you choose for your income insurance is essential. Depending on whether you opt for permanent disability insurance or sickness and Injury Disability Income Insurance, your benefit period will vary.
If you are temporarily unable to work, then it is better to have an estimate of the period you need financial assistance and choose that period only, not longer. This is because the longer your benefit period, the higher your premium. Hence, if you cannot resume work temporarily, choosing your term period selectively is best.
Alternatively, if you are permanently unable to go to work, you should choose a term period that is economical for you. As these are tax deductible and can be renewed if required, you can choose a term period that benefits you.
Protect your sources of income with income insurance!
A lot of us don't go for income insurance because we are not confident about the return on investment it can bring us in the long term. Being mentally and physically healthy is the key to a fulfilling life. However, when one of these two fails us, having a backup plan to keep your income flowing is a blessing!
With Asteya income insurance policies, you can choose coverages and benefit periods suited to your needs. Rest assured that our insurers will help you with the best policy available!
Check out our website at Asteya to learn more about income insurance!