Every year, millions of Americans find themselves out of work either due to prolonged illness or injury or because their employer has ceased trading. Unfortunately, without the gift of foresight it is just not possible to predict how events may conspire against you in the future but you can take some steps to give yourself maximum protection against all eventualities.
When a principal breadwinner loses their income, it can have a devastating ripple effect on the rest of the family. If the reasons behind your inability to work are medical, there are the additional expenses to factor in to your household budget which has already lost most of its income stream. Struggling to pay for expenses in this situation can lead to additional stress and even confrontation within the family.
What is Income Protection Insurance?
Income protection insurance is also known as permanent health insurance as it is in place over the long term to protect you should you be unable to work due to illness or injury. When you have an income protection policy you will continue to receive a regular income until such times as you are able to return to work or retirement, if that time comes first.
This kind of insurance also replaces part of your income if you have to reduce your working hours due to disability and basically provides solid financial support all the way through to retirement. Most illnesses that leave you unable to work are covered in these policies, whether short or long term conditions and you can make claims as many times as you need to while you hold the policy.
Do you need Income Protection Insurance?
Whether you choose to take out income protection should not be based on whether you have dependents or not, although naturally your family are of concern if you’re unable to work. Income protection is designed to give you a blanket of protection against serious illness so that you can continue to provide for yourself if you are unable to continue working. If prolonged illness or injury would leave you in a situation where you could not afford to pay your bills, you need to consider it as an option.
For people who are self-employed and at risk of losing considerably more than their income if they should suffer from serious illness, income protection insurance is a must. Not being able to work when you are a sole trader is a more significant problem than if you work for a business organization and there could be some delay in getting government benefits to supplement your income in these situations. Income protection means that you are already set up to continue receiving an income from the moment you are unable to work and best protects you and your family from any financial shocks.
Why is Income Protection Important to My Family?
No matter how secure you are in your job or how confident you are of your financial future, it is impossible to clearly predict. Insurance is an affordable way of protecting against high risk situations such as the possibility of losing a principal income due to serious illness. A good family plan should include adequate support for all other members should one be incapacitated in any way so that the others aren’t disadvantaged. It is definitely worth further research and getting some competitive income protection quotes online.
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.