Learn How To Compare Income Protection Insurance Easily
Income Protection Insurance is essential for all working individuals, particularly those with a family and especially those with debt (such as a mortgage). Choosing the right insurance provider is a task that can feel particularly overwhelming. However, you shouldn't despair as there are easy ways to compare Income Protection Insurance policies.
Firstly it's vital to understand what Income Protection Insurance is so that you can compare the policies on offer with great care. Income Protection Insurance covers you in the event that you cannot work due to sickness or injury. Therefore, if you are not able to effectively carry out your employment or you are unable to run your own business, your Income Protection Insurance payments will kick in to compensate for your lost salary. Thus ensuring you have money to pay your mortgage, buy food for your family and cover your bills. It is usually paid at a rate of up to 75% of your regular income and is paid fortnightly or monthly rather than as a lump sum.
Most people these days start their research on the Internet. This is a good way to familiarise yourself with the basics of the various policies on offer, however, as with mortgage insurance this isn't an area that you should attempt to DIY. It's important to then seek the advice of an insurance expert.
Speaking to a specialist insurance broker will ensure that you have considered all the options carefully and that you're getting the best policy for your individual situation. When you sit down to compare Income Protection Insurance options, it's important to look carefully at the following -
1. The Premium: for many people it is instinctual to go for the cheapest option. We all love a bargain but this is not the time to scrimp and save when it means that you could later miss out on assistance that you really need.
2. Level of cover: generally income protection will cover up to 75% of your base salary. The higher the level of cover you have the higher the premium will be. What's important is that in the event of illness or injury the policy will provide enough income to cover your expenses. Before finally deciding on a policy, determine a minimum weekly or fortnightly amount you and your family could manage on. Ensure that any policy you take provides this as a minimum.
3. Own occupation: another important consideration is whether the policy insures you for your "own occupation" or "any occupation". It is more costly to insure for your own occupation.
An example that best illustrates this - a builder seriously injures his hand during a car accident. His Doctor determines that he will never be able to return to work as a builder. Fortunately, he has income protection insurance that covers him for his "own occupation". Because he cannot work specifically as a builder, he will receive income protection insurance payments for the rest of his working life.
If the builder's income protection insurance policy only covered him for just about "any occupation" and his Doctor had determined that he could return to work in a different capacity. Then, his insurance payments would cease and he would need to find a different job to support himself and his family.
4. Inflation and salary fluctuations: it is also a good idea to take inflation and potential salary fluctuations into consideration. Your potential earnings in 10 years time are likely to be much higher. It's important to check that your income protection insurance policy payments will be calculated on your salary at the time of your claim, not when the policy was originally established.
About the Author
Compare income protection insurance at http://www.fhfinances.com.au . Full House Finances is a one-stop financial services business offering all important information you need when buying property.
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