In today’s uncertain world, it might prove to be very risky to presume that your income is guaranteed. That is also why it may be advisable to think about income protection insurance.
Broadly speaking, this cover breaks down into two general categories:
- long-term income protection (sometimes referred to as ‘lifetime income cover’);
- shorter-term accident sickness and unemployment insurance (sometimes called ‘ASU’ as an abbreviation).
Longer-term income cover
Some accidents, injuries and illnesses, may be so severe as to lead to permanent disability or an ongoing inability to obtain conventional income.
In such a situation, not only are the results tragic but they may also lead to significant financial hardships for the individual and their immediate family.
Insurance policies to deal with this are available.
ASU insurance
Perhaps slightly more commonplace is the shorter-term cover designed to help you in situations where you are temporarily unable to obtain income and as a result, may run the risk of getting into financial hardship.
The exact details of the cover provided will be contained within the policy documents, however, as the name suggests, this type of policy may typically cover:
- accidents that meant you were unable to work and obtain income;
- sickness that had a similar effect;
- being made redundant (it is important to note that these policies typically do not cover situations where you have resigned or taken voluntary redundancy).
This type of policy will typically provide you with monthly income to the figure that you have selected and paid for (maximum limits may apply). They will pay out for a maximum period of time, as specified by the policy, after which payments will cease.
This financial assistance may prove to be absolutely invaluable in helping you pay certain of your bills and maintain some semblance of normal life, until such time as you are able to get back into work and earn income.
Selecting cover
The type of policy that is suitable for you will depend entirely upon your individual circumstances, such as your age, health, income levels and outstanding financial commitments etc.
What is certain is that it is a good idea to take a few minutes to think about your overall financial position and the potential advantages of having some form of income protection insurance.
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