Is Income Protection Insurance Really Necessary?
After an unconventional year in a global pandemic and many people taking on new jobs and career opportunities, it’s not unusual for people to be considering whether or not they need income protection. Whether you’re a 1099 worker worried about what might happen if you got hurt on the job, or a new homeowner looking to ensure financial security in unusual times, it could be important to consider investing in income protection insurance to buy yourself peace of mind. To learn more about income protection insurance and why it may or may not be right for you, read on.
Assessing Risk
If you’re someone who doesn’t like to take risks, is in a good place financially, or who has big dreams and goals, it might be a good idea to look into income protection insurance from a place like iSelect. Income protection insurance serves as disability insurance for hardworking people in case they get sick, find themself with a long-term disability, or are facing an extended loss of income with little to no warning.
The way this disability insurance works is that you pay monthly premiums to your policy in exchange for your insurance company guaranteeing future expenses should you lose your taxable income. This insurance is great if you get seriously hurt on the job and need to file for social security disability benefits. Similar to workman’s compensation insurance, it can be particularly helpful to people who work in the trades and rely on their bodies to do dangerous jobs on a daily basis.
When considering whether or not it might be worth paying into an income protection plan, it’s a good idea to understand the policy rules and regulations and to know what your monthly benefit might be should you get hurt and be out of work. When calling an insurance agent, you’ll also want to ask about how policies vary for people who own their own business, employees, and people who work as subcontractors. You might be surprised to learn just how many options there are and which could work best for you.
Mitigating Risk
Insurance to protect your income could be a good idea for you if you have a to lose. In making this decision, you’ll want to take a look at your regular monthly expenses and any assets or property you’d want to hold onto should your income end. Homeowners and people who have loans on assets or businesses might be in higher need of income protection than a young adult just starting out and with a safety net like living with roommates or parents.
Your Specific Career Needs
Like these insurance plans, no two careers are exactly alike. For that reason, it’s important to understand your career goals when deciding whether or not you need income protection insurance for financial security. If you’re someone whose job is at higher risk for serious injury, income protection might be a good idea. A school teacher, on the other hand, may already have coverages high enough to pay monthly expenses and less likely to need it.
When making your decision it’s important to understand that quality of life and peace of mind matter. Imagine yourself getting hurt or being sick for an extended period of time. Unable to file for unemployment if you aren’t able to work, would you be able to sustain your monthly expenses without some form of income? Could you handle the stress of living with no paycheck for six months or more? Asking these questions could help with your decision.
In the end, whether you opt for income protection insurance or not, the most important thing you can do for yourself is to take an honest look at your goals and options. In making an informed decision on income protection and having a ‘plan B’ should something happen, you’ll be able to spend your off days resting easier.
