Loosing your ability to earn income may have a disastrous effect – both on your life and that of your family. Income protection insurance can offer a financial lifeline.
There are two different types of this insurance, each designed for a different purpose and offering a different level of cover. Both types may provide you with a replacement income to help you to maintain your lifestyle.
Long-term income insurance provides cover, as the name suggests, for an indefinite period of time if you are unable to work due to an illness or incapacity.
It does not provide cover for redundancy or long-term unemployment.
Short-term income cover can provide protection for a period typically of up to 12 months. It comes into effect if you are unable to work as the result of:
- redundancy – involuntary only, accepting voluntary redundancy does not qualify;
- a long term illness;
- being incapacitated in an accident.
This type of cover can be known as ASU insurance, which is short for Accident, Sickness and Unemployment insurance.
This type of income protection insurance tends to be less expensive than the longer-term variety, as the payment period is typically a lot shorter.
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