Income Protection Insurance

Features of Income Protection Insurance

Provides a replacement income when you become sick or injured.
Unlike plans provided through employers that can end if you lose your current job, personal income protection insurance plans cannot be taken away from you.
Income protection insurance costs and options are highly dependent on one's occupation: a person with a dangerous occupation is more likely to become disabled, so will have higher costs and fewer options.
Proportionate benefits may be payable if you return to work on a lower income.
The amount of coverage you purchase cannot exceed a specified percentage (tyically 50% or 66%) of your current earnings (ie. you cannot insure what you do not have). 66% of you income may not sound like enough to survive on, but the money paid from a disability insurance claim is tax free. After taxes, it is approximately equal to your regular income.

Options

You can select the monthly income you receive while on disability.
The deferment period (the time you have to wait between become disabled and receiving your first check) can be 1, 3, 6, 12, or 24 months.
You select the age that your coverage ends (typically between age 50 and age 65)
Increasing benefit: benefits increase during the course of a claim to keep your benefits consistent with the cost of living.

Uses of Income Protection Insurance