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Written by Lauren Claxton

Let’s say you are your family’s sole source of income. When working at full capacity your lifestyle is comfortable—your children are in school, and you never go without a meal. However, if an unforeseen disability prevents you from working, you could find yourself between a rock and a hard place. This is where income protection insurance might be worthwhile.

Life is unexpected: injuries and illnesses pop up at the worst times and, depending on your situation, can put pressure on your finances. Income protection insurance serves as a proactive measure to lessen the stress, should you find yourself unable to work.

Yet, income protection insurance may not be relevant for every worker’s situation. Taking time out to consider how you would cope with the sudden loss of your income can be valuable, regardless of your position.

What Is Income Protection Insurance?

Income protection insurance is a branch of life insurance designed to protect the worker in the event of a total or partial disability which restricts the capacity to work. More simply, income protection will replace a percentage of your salary while you recover or attain new employment.

If you work in a typically non-threatening environment and aren’t at significant medical risk, you might not see the need for income protection insurance. However, high-risk occupations, such as trade work, might find income protection insurance more relevant.

Naturally, the salary percentage and the duration of cover (benefit period) will vary depending on the insurer you choose. It is also worthwhile to identify the type of income protection insurance that will best suit your circumstances.

Types of Income Protection Insurance

Whilst taking a broader approach to income insurance may be a better idea, there are a range of more specific insurance options worth considering during the research phase. Some of these types include:

  • Personal accident insurance,
  • Redundancy insurance,
  • Self-employed worker insurance,
  • Sickness and accident insurance, and
  • Mortgage protection insurance.

There are many other types of income protection, offering different levels of cover for specific areas of concern. If, for example, you are self-employed then a more tailored level of protection may be necessary. Discussing your circumstances with your insurance provider can be an excellent first step.

Income protection insurance might be worthwhile. An unknown disability could leave you without a means of income, potentially putting pressure on your finances. It also serves as a proactive measure to lessen the stress, should you find yourself unable to work.