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What Is Income Protection

Income protection insurance is considered as a must for people are the bread winners of the family since this type of insurance protects the policy holder’s family financially if the policy holder is permanently or temporarily injured. Income protection covers also protect the policy holder and his family financially if he cannot work due to certain other reasons such as sickness. A few income protection policies also offer cover for people who are unemployed or retrenched.

Income protection covers are customizable which means that buyers have the option to choose the amount of cover they want, the type of policy they want and the benefits they want. While cheaper policies cover up to 50-60% of the policy holder’s annual income, better policies cover up to 75% and may also cover an additional 8% if the policy holder qualifies. The amount of cover selected directly affects the cost of the contract.

Buyers have the option to either choose an indemnity contract or an agreed value contract and each of these contracts have their own perks. Buyers also have the option to choose from non cancellable contracts or contracts that can be cancelled by the insurance company. Cheaper policies usually offer an indemnity contracts that can be cancelled at the time of renewal by the insurance company.

The main benefit of this type of insurance are that the policy holder receives monthly payments from the insurance company after his claim is accepted. However, before getting the first monthly payment, the policy holder has to wait for a certain number of days and this is known as the waiting or cooling off period. Buyers have the option to choose the number of days they want to wait and in most cases they get an option to choose between 14 days – 2 years. Some insurance companies offer limited options such as 30, 60, 90, or 120 days and cheaper policies usually have fewer options. A shorter waiting period costs more and cheaper policies usually offer longer waiting periods of 6 months or more.

Other benefits of income protection insurance include a death benefit for the policy holder and transplant surgery benefits. Some insurance covers also offer additional benefits for no extra cost. A day one claim benefit and cosmetic surgery benefit may also be offered to the policy holder. Buyers should remember that by selecting good insurance policies that offer many benefits, they will be ensuring that their families do not have to suffer in case there cannot work in the future.

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