There are many ways in which life can take us by surprise. One minute, everything’s going great; the next, disaster strikes. Whatever the nature of the disasters we face, it is how we respond to them that determines the size of any financial losses we may sustain. Prepare well, and you can weather almost any storm without sustaining serious damage. Leave it to luck, and the fates may not be so kind. One of the best ways to prepare for future financial shocks is with income protection insurance, the topic of today’s post.
What Is Income Protection Insurance?
Income protection insurance is a type of insurance that pays out in the event you are unable to work due to illness or injury. Typically, it will pay out around 70% of lost income for a defined period of time, helping ease your financial pain at a difficult time. Different policies may have different waiting times, total coverage and benefit durations.
How Income Protection Insurance Can Help
Whether you’ve already made your fortune or you’re still in the active wealth-building phase of your life, income protection insurance is an invaluable tool that you can use to save yourself from financial disaster when things go wrong. With a solid income protection policy, you can:
- Protect Your Savings – The first line of defense when times are tough is normally cash savings at the bank. If you purchase income protection insurance, you won’t have to crack open your nest egg just because you’re unable to work for a while.
- Keep Your Assets Safe – With income protection benefits arriving regularly, you can pay your mortgage and service your car loan until such a time as you’re able to resume working. This will help ensure that your home and vehicle remain in your possession.
- Stay Positive – With plenty of money to pay the bills and keep yourself fed and watered, it will be much easier to maintain a positive outlook during your recuperation/rehabilitation. A positive outlook can make a huge difference to the speed with which you’re able to recover from illness or injury.
- Reassure Your Family – Loved ones may panic at the thought of financial difficulties and physical hardship, but if they do, you can quickly reassure them that all will be well. With the majority of your income being replaced by your insurer, there will be lots of time to figure out how to proceed.
- Make Better Financial Choices – When money is short and you’re feeling under pressure, it’s easy to make the wrong choices as far as your finances are concerned. On the other hand, if you know that money’s not an immediate issue, you can be more discerning about the offers and opportunities you’re willing to consider.
For all these reasons, income protection insurance is a valuable weapon that should be in the arsenal of every working adult in Australia and elsewhere. Without it, a short period out of work could turn your life upside down from a financial perspective.
