Income Protection Insurance: cover if things go wrong
Cara Tobin
3 April 2008Income protection insurance: cover if things go wrong
Unfortunately in life, things don’t always go swimmingly. This we all know but when it actually happens to our loved ones, or us, it ain’t so grand. If brushing our teeth is an integral part of life to protect against cavities, why isn’t insuring against loss of income? Is it because it all seems too complicated and therefore it gets buried under the Persian rug or is it that we truly believe nothing bad will happen to us?
Expanding on my last blog, let’s continue to discover why Income Protection Insurance should be our friend.
While the thought of spending money on something that doesn’t give me instant gratification horrifies me, I understand that planning for the future – including surprises. I was grateful my Mum kept whispering in my ear to get private health insurance when I realised I couldn’t distinguish the gender of people walking towards me. Thanks to the optical component of my health fund, I was able to afford funky-framed glasses.
Yes, there are some lucky devils who seem to avoid misfortune, but they are a serious minority. Besides, maybe their streak of good luck could come to a blinding halt at any point so they should be just as prepared as us mere mortals.
Annoyingly, Income Protection Insurance should be considered a definitive part of business life. Why annoyingly? Well, it takes some effort on our part to discover what is the right coverage for our situation. So, open up the lid of Pandora’s Insurance Box and start investigating. There are so many choices, variables, conditions and clauses that it may make you want to curl up and cry like a baby. But now is the time to clasp your quivering bottom lip between your teeth and stand up tall. You can do it.
When self-employed TV Producer Jacqueline Taylor went to her financial adviser recently, he asked her what was her biggest asset. The answer? Not her house or car or fabulous wardrobe but her ability to make money. Therefore, Taylor took out an agreed-value policy and feels lightness in her money-making step.
What is an agreed-value policy? This is where you provide evidence of your earning capabilities up front, therefore guaranteeing you a monthly sum (usually 75% of your monthly income) for as long as you need it. Of course, you can’t lounge around in bed dramatically declaring that you just don’t feel like working any more. You must be medically unfit to work and have regular check-ups with your doctor, who reports back to your insurance provider.
Another option is Indemnity Policy, which involves proving your earning capacity after you have been declared unfit to work. While not as guaranteed as the Agreed Value Policy it is usually cheaper.
When an acquaintance of mine first became self-employed 20 years ago, he took out an Agreed Value Policy. At $200 a month he felt it was a good debt to have. 12 years later, he was diagnosed with pneumonia, pleurisy and an extremely high-risk level of blood pressure. No longer able to work, he thought he would have a hell of a fight to claim the policy but found it relatively easy. Eight years later he is still unable to work. Fortunately he is able to continue drawing the dividends of the policy..
How do you choose the best policy? A lot of small-business owners hire Insurance Brokers to guide them to the best possible policy and provider. Others are happy doing their own research or talking to friends about their policies. There are also websites where you can get instant online quotes as well as sites that compare different companies and policies.
But one thing is for certain; do not make a rushed decision until you feel completely confident in your policy and the company providing it. Like buying a house, a car, or a fabulous wardrobe, this is an investment to make your life easier.
Helpful Sites:
http://www.financialservicesonline.com.au/newsletter/insurance_articles/income-protection-insurance.php
http://www.cashbacklifeinsurance.com.au/index.php?ID=5
http://www.homebasedbusiness.com.au/
3 April 2008Income protection insurance: cover if things go wrong
Unfortunately in life, things don’t always go swimmingly. This we all know but when it actually happens to our loved ones, or us, it ain’t so grand. If brushing our teeth is an integral part of life to protect against cavities, why isn’t insuring against loss of income? Is it because it all seems too complicated and therefore it gets buried under the Persian rug or is it that we truly believe nothing bad will happen to us?
Expanding on my last blog, let’s continue to discover why Income Protection Insurance should be our friend.
While the thought of spending money on something that doesn’t give me instant gratification horrifies me, I understand that planning for the future – including surprises. I was grateful my Mum kept whispering in my ear to get private health insurance when I realised I couldn’t distinguish the gender of people walking towards me. Thanks to the optical component of my health fund, I was able to afford funky-framed glasses.
Yes, there are some lucky devils who seem to avoid misfortune, but they are a serious minority. Besides, maybe their streak of good luck could come to a blinding halt at any point so they should be just as prepared as us mere mortals.
Annoyingly, Income Protection Insurance should be considered a definitive part of business life. Why annoyingly? Well, it takes some effort on our part to discover what is the right coverage for our situation. So, open up the lid of Pandora’s Insurance Box and start investigating. There are so many choices, variables, conditions and clauses that it may make you want to curl up and cry like a baby. But now is the time to clasp your quivering bottom lip between your teeth and stand up tall. You can do it.
When self-employed TV Producer Jacqueline Taylor went to her financial adviser recently, he asked her what was her biggest asset. The answer? Not her house or car or fabulous wardrobe but her ability to make money. Therefore, Taylor took out an agreed-value policy and feels lightness in her money-making step.
What is an agreed-value policy? This is where you provide evidence of your earning capabilities up front, therefore guaranteeing you a monthly sum (usually 75% of your monthly income) for as long as you need it. Of course, you can’t lounge around in bed dramatically declaring that you just don’t feel like working any more. You must be medically unfit to work and have regular check-ups with your doctor, who reports back to your insurance provider.
Another option is Indemnity Policy, which involves proving your earning capacity after you have been declared unfit to work. While not as guaranteed as the Agreed Value Policy it is usually cheaper.
When an acquaintance of mine first became self-employed 20 years ago, he took out an Agreed Value Policy. At $200 a month he felt it was a good debt to have. 12 years later, he was diagnosed with pneumonia, pleurisy and an extremely high-risk level of blood pressure. No longer able to work, he thought he would have a hell of a fight to claim the policy but found it relatively easy. Eight years later he is still unable to work. Fortunately he is able to continue drawing the dividends of the policy..
How do you choose the best policy? A lot of small-business owners hire Insurance Brokers to guide them to the best possible policy and provider. Others are happy doing their own research or talking to friends about their policies. There are also websites where you can get instant online quotes as well as sites that compare different companies and policies.
But one thing is for certain; do not make a rushed decision until you feel completely confident in your policy and the company providing it. Like buying a house, a car, or a fabulous wardrobe, this is an investment to make your life easier.
Helpful Sites:
http://www.financialservicesonline.com.au/newsletter/insurance_articles/income-protection-insurance.php
http://www.cashbacklifeinsurance.com.au/index.php?ID=5
http://www.homebasedbusiness.com.au/
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