Your income is your most valuable asset as it helps you live a luxurious lifestyle. The more income you have, the more easily you can spend money and the more luxuries you can afford. However, a good income is important not only to afford luxuries but also the necessities in life, such as food and car.
The amount of money we make, i.e: our income, is usually fixed, however it is never guaranteed. Now imagine this situation.
You work as a manager for a big company and make $5,000 per month. You are allowed two sick days per month, but you fall terribly ill and have to take five sick days. Now what would happen at the end of the month? You will get a deduction and hence make less money than you usually would.
This can put you in a financial mess. Most people in Australia live hand to mouth, and having less money can make it difficult for them to cover the bills which may even force them to turn to debt.
This can ruin your whole life, and the best option in this regard is to turn to means of protecting your income.
There are several ways to do so, but the most reliable way is to get your income insured. There are many companies that offer income insurance and can safeguard your income in case something unfortunate occurs.
An income insurance ensures that you get paid a percentage of your salary if you are unable to work due to illness or injury. When you work for a company then it is vital that you get yourself insured in order to protect your income.
What You Need To Know About Income Insurance?
While it is a great step to get income insurance to protect your income, it is also important that you have the necessary knowledge regarding it. There are mainly two types of income protection plans that are being offered by insurance companies. They are short term income protection and long term income protection.
Short Term Income Protection
This type of income protection covers your monthly expenses. It covers sickness leaves, injury leaves and even unemployed cover. However, when we say sickness leaves, it doesn’t cover normal fever or backache sickness, it involves getting terribly sick such as catching a dangerous disease which restricts you from working or even leaving the house.
The cost of this income insurance depends upon your salary. For people earning under $2000, they usually have to pay $35-$40 per month. While those who earn around $8000 have to pay around $110-$120 per month.
Other than that, this type of insurance also covers injury leaves. If you get into an accident and get a fracture or get severely injured and are unable to go to work then this income protection plan will cover you until you’re healed, however it comes with time limits and covers you for a maximum of 12 months of injury. Moreover, mental health problems are not covered in this type of insurance plan.
This type of income insurance plan is perfect if you wish to have your monthly expenses being taken care of in case you come across any of the above mentioned mishaps and can’t work.
Long Term Income Insurance
The difference between a short and a long term insurance is that this type of income insurance work until you retire. It covers around 50% to 65% of your income if you fall ill or get disabled or injured due to an accident.
Income insurances are important as they protect your income when you fall sick or get injured, however, find out if your employer offers any type of insurance to you. However, if your company does not protect you, then look for an insurance agency on your own and sign up to protect your income before it is too late.