Word Street Journal

We’ve all heard the quote that we should ‘Hope for the best, but prepare for the worst’, and these are fine words to live by. All of us who rely on our employment to provide income could find ourselves in a nightmare scenario where we lose it unexpectedly. Luckily, with income protection insurance, we can protect ourselves against the times when things don’t go according to plan. Having a safety net in place can be a great relief, and peace of mind knowing we have essential financial assistance in place is a powerful thing.

How income protection insurance works

Income protection insurance replaces your regular income if it is suspended or otherwise unavailable for reasons covered by the conditions of the policy. Most occurrences revolve around injury or sickness, but others are also covered. As expected, any claim that cites medical issues will require an official report validating the condition and how it prevents the policyholder from working normally.

Income protection insurance: Eligibility requirements

Although variations exist, eligibility for income protection insurance typically requires applicants to be:

• ‘Gainfully’ employed/self-employed. Depending on the nature of the employment, the policyholder must work for at least 20-30 hours per week in a legitimate position that provides predictable, steady income.
• Aged between 18 and 59—Standard age restrictions apply in most cases, but applicants deemed working in high-risk occupations may face additional conditions and costs
• Naturalised citizen/legal permanent resident

Situations income protection insurance does not cove

Standard income protection insurance policies do not provide cover in the following circumstances:

• Criminality

Any criminal activity that leads to a loss of regular income is ineligible for remuneration, including recovery from associated injuries or incarceration.

• Suspension

Standard income protection insurance does not cover temporary or permanent suspensions, irrespective of the reasons behind them and whether they are contested.

• Self-inflicted injuries

Any incidences of self-harm that lead to time away from work will not be covered.

• Pregnancy

Absences due to pregnancy, childbirth, maternity leave or related health issues are not typically covered.

• Acts of war

Hopefully, this is something we will never experience, but a caveat that exists nonetheless.

Researching income protection insurance

When researching income protection insurance policies, the following tips are recommended:

• Read the fine print carefully, using comparison sites to scrutinise policy details side-by-side if possible. Make notes for future reference.
• Contact potential providers directly. Additional incentives and discounts can sometimes be offered, and you can clarify any conditions or concerns. Remember that the people you speak with are part of the same team that will handle any claim, so assess their attitude and efficiency and react accordingly.
• If you feel overwhelmed or unsure which to choose, consider seeking professional advice from an experienced insurance broker.

Conclusion: Is income protection insurance worth the premiums?

Undoubtedly, it is worth having if the premiums are affordable with your budget, and you would be severely affected by a loss of employment income. Income protection insurance removes this worry, provides comprehensive financial support, and gives us the freedom to get on with our lives.