Income protection insurance is the guaranteed monthly income you may receive while you are sick. If you are absent from work due to an emergency or an accident, your insurance is your saviour.
But there are certain misconceptions regarding this concept. Many people believe different things that are not true at all. Whenever you plan to get income protection for yourself, you are making a wise decision.
Your family may face a problem coping with life situations in your absence. If you’re not there, it may be tedious for them to pay for their basic expenses. They would be a significant reduction in the income in this case.
What is the way to go with the basic needs? How will the family pay their household bills, mortgage, and rent?
Be Wise and Safeguard your Income
Many people do not get the chance to protect their families. In case they are unable to work or are absent, their family suffers.
Some people borrow loans from money lenders in Ireland, but there still is a problem with repayment. Hence, be wise and make an informed decision regarding your finances.
Misconceptions about Income Protection Insurance
1. I can manage without the cover
One of the basic misconceptions of income protection insurance is that it is not vital to have a tower. Usually, people think that the money will be wasted and it is not essential in your life.
This is the most common notion about insurance protection cover. According to statistics, almost 28,600,000 working days were lost in 2016.
This is due to the non-availability of the people. Many individuals do not understand the importance and believe that it is not essential, and hence this is a contradictory statement.
The amount that is to be paid on a monthly basis is not much. It is a lesser amount, and you may receive much more than what you pay. Taking a normal situation, if you are absent from work, how will you pay the bills for your family?
What will happen to the peace of mind? It becomes difficult to cater to the regular expenses in a month in a lengthy absence. Hence, many people should understand the importance, and they should go for insurance protection cover.
2. It does not cover a Layoff
Many people believe that income protection does not cover redundancy. The main objective of this insurance is to give you a regular source of income.
If you are not coming to work or you are sick, this is the right step for you. Most of the people confuse payment protection insurance with mortgage protection insurance. These two are different concepts.
Income protection usually covers a significant portion of your regular income. Whatever the monthly payments are, it is bound to cater to that. Until you return to work, this cover is there to assist you.
If you are not well and do not return to work until you’re a timer, this English come protection insurance is there for you. Hence, you do not need to worry in case you are unavailable.
Do not confuse your income protection with any other kind of insurance. There are different benefits for every insurance that should be understood and analyzed in detail.
3. It is too expensive
Many people believe that it is too expensive to get income protection, whereas it is entirely wrong. Getting income protection cover is not that expensive. It falls within budget and helps you to start your savings as well.
Whenever your investments and savings are not possible, you can explore another way to protect your income. Getting protection for your income is one of the ways to push you in the direction of savings.
If you check around, you will find that this is not an expensive deal. There are different plans that cover other options. You have to analyze your own choice and go for it.
For example, if you choose the waiting period, you may start receiving benefits post that. Ultimately, you will land up to a lower monthly premium. If you have to pay lesser income in a month, it is not expensive at all.
Weigh both sides of it, i.e. the income you are paying versus the money you will be getting. The latter is always on the heavier side. Make sure to take a wise decision and start with your savings as soon as possible.
4. It cannot happen to me
If you think that nothing will happen to you, you are wrong. It is always good to stay in good health, but an emergency can happen to anybody. It is natural to get stuck in contingencies. For example, you cannot predict the future.
If you meet with an accident, it can be difficult for you to go back to work. Hence, always keep a Plan B. Staying positive is essential but having a backup is more important.
According to research, almost 2 in 10 people need consecutive offs in six months. This can be any reason. Either it can be an illness, or it can be an emergency situation.
Further, the research indicates that 67% of the people go on a long-term sick leave during their working life. These leaves are unplanned. But they still take leave due to unforeseen situations.
Nobody can predict the future, and hence it is essential to be on the safer side. If you suffer from a serious illness, you do not know the future. Be practical and try to protect yourself and your family.
If you stay in for a longer time, your income needs a family to cater to your daily expenses. In this situation, your income protection insurance works.
During your long absence from work, you will keep getting sufficient Monthly income. This monthly income will help your family come out of any kind of debt or pending bills.
5. I have taken the PPI cover
If you already have a PPI, this does not mean that you cannot take any protection for your income. PPI and income protection insurance may sound the same, but they are entirely different concepts.
PPI is usually taken when you are unable to make the repayments on your loan. Alternatively, if you have a credit card debt and you are unable to repay, you take a PPI cover.
If you cannot repay the loan with bad credit in Ireland, PPI will be helpful for you. Basically, it helps you to make pending those payments. You should not stick in a debt trap. Hence, PPI saves you from the situation.
Taking a PPI can get you out of a debt trap, but what about the other essential and daily bills. You may be surrounded by food bills, rents, grocery bills, utilities, clothes and many other things. What about that?
How can you fulfil those basic needs? How can you cover these expenses if there is no income left or URL? In this case, your income cover comes to the rescue. You may get insurance with a tax-free monthly income.
With this, you can easily maintain your daily lifestyle, and you will not have any money problems. Till the time you are not going to work, you can easily preserve your family expense.
Protecting your income is a must as life is unpredictable. This does not mean that you have a negative approach to life.
It only means that you think on practical lines and have something to fall back upon.
Hudson is a graduate of banking and finance and works as a financial consultant at MyLoansBoat. He has a professional qualification to counsel people about money management. At MyLoansBoat, his key duties include shortlisting applications of borrowers and counseling them about credit score improvement, building an emergency cushion, retirement funds, and getting rid of debt. He is an ardent reader of finance books and uses the gained knowledge to help people with their finances. He also writes for the company’s blog on various topics like budgeting, investing, saving, debt management, joint finances, and the like. His aim is to dedicate his life to helping people have a debt-free life.