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Income Protection Insurance

Income protection insurance is a type of specialized insurance that enables people to live their life normally if they cannot work due to health reasons. People who opt for this type of insurance receive a monthly payment from the selected insurance company after they file a claim. The amount they receive depends on the insured amount and the type of plan they have selected.

The maximum amount policy holder’s can insure their income for is 75%, however in some cases, people are given the option to insure themselves for an additional 8%. The benefit period is the amount of time the policy holder can enjoy the benefits offered by the insurance plan. In most cases, policy holders enjoy benefits of the insurance plan for a limited time only which means that the policy holder will receive monthly amounts and other benefits for a set number of years. The benefit period has a direct effect on the cost of the insurance plan.

The cooling off period or the waiting period is mandatory and all policy holders have to wait for a certain number of days before they can enjoy the benefits of the selected insurance plan. Policy holder’s only have to wait to get the first amount from the insurance company, after which they receive payments each and every month without any delay. A longer waiting period allows buyers to save money on premiums and a shorter waiting period increases the cost of the policy.

Buyers can select between two types of contracts. The first type of contract is the agreed value contract and the second type of contract is the indemnity contract or limited contract. The indemnity contract has limitations hence it is cheaper. Buyers also have the option to choose how they want to pay their premiums. Buyers can either pay premiums every month or every year. In addition, buyers can also decide if they want to pay a fixed amount to the insurance company as premiums or if they want to enjoy low premiums for the first few years and then pay high premiums after that.

Before buying an income protection insurance plan buyers should remember that the plan they select should meet their requirements, hence they should customize the plan as per their needs. Buyers who plan to select a longer waiting period should consider factors such as the number of paid leaves they have and their financial obligations before deciding how many days or months they want to wait.

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