Income Protection Policy
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An income protection policy can be a safe and reasonable short-term money solution, but a financial cover should not be considered a long-term answer to a person's money concerns. Therefore, the insurance is a form of stop-gap coverage. These types of insurance policies are not designed for an injured or disabled person to live on for years. In fact, there are measures built into most agreements to prevent people from living long term on benefits received from an income protection policy. According to an information website, income insurance is known by several different names, but they all essentially provide the same service. Other names include: permanent health insurance, income cover, income protection, income protection cover, sickness insurance, or just simply insurance protection.
Basically, the income protection policy provides funds to people who have lost the ability to earn wages due to illness, injury, or disability. On the surface, the policies sound like a good deal, but there are limitations to be aware of before buying. Basically, funds received from cover policies can be used however the insured chooses. The money can be used to pay bills and make mortgage or credit card payments. When buying an income protection policy, a person can buy as much coverage as he or she feels is needed. Not surprisingly, better coverage will cost more money. However, a person will not be able to profit from their injury or misfortune. A person will not be able to buy more coverage than they would make on the job. They will not even be able to make 100 percent of their projected wages. In fact, they will lose money, because benefits will probably be capped at about 60 percent of what a person would earn if they had continued to work. Insurance companies limit the benefits for a couple reasons. First, the funds are not taxed. Second, paying less than the person would earn from his or her job is an incentive to get the individual back to work once good health is restored. Otherwise, the rehabilitation period could be extended indefinitely.
Christians can reference at least three passages from the Bible to help understand how not working, if able, is a bad way to go. The first passage can be found in 2 Thessalonians. Basically, the passage says that if a person doesn't work, then the person doesn't eat. Not eating is major grief in any person's life. So connect that with the second passage, which is found in 1Timothy. That passage says money is the root of all kinds of evil and some people eager for money have wandered away from faith and burdened themselves with unnecessary grief. Finally, Luke addresses the dangers of serving two masters. "No servant can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon. And the Pharisees also, who were covetous, heard all these things: and they derided him. And he said unto them, Ye are they which justify yourselves before men: but God knoweth your hearts: for that which is highly esteemed among men is abomination in the sight of God." (Luke 16: 13-15)
Some policies offer what are called partial or rehabilitation payments, when a person returns to work on a part-time basis. When considering the purchase of an income coverage policy read the fine print and know what is and is not covered before buying and signing for the coverage. Also, don't expect payments to start rolling in immediately. Most policies have a deferral period before payments begin. This period will vary from policy to policy but can be anywhere from four weeks to one year. And there are numerous exclusions with an income protection policy. Most coverage policies will not pay benefits pregnancy and childbirth. For the most part, pregnancy and related health issues are covered by other insurance. Government legislation has established rules and guidelines that regulate the income protection policy industry. The rules have been established to protect everybody involved. A search of government websites indicates that several companies that offer income cover policies have been fined in the past. In fact, the business continues to be a concern to government regulators. For more information research both government and private organizations that are familiar with cover policies.
No income protection policy will pay benefits for any self-inflicted injury. Also, any downtime stemming from alcohol or drug abuse is not covered. Pre-existing conditions are not included in most policies. If an insured person is still being paid by the employer or is hurt in a dangerous sport not specifically written into the agreement, benefits will not be paid in most cases. Retired, self-employed, and part-time workers are generally not eligible for cover insurance. Seek the advice of a financial counselor before purchasing a policy. There appears to be some debate as to the best place to purchase an income protection policy. Some people believe an agent who deals with the products of only one company is best. Others believe going to an agent who handles multiple companies and products is better. These agents are able to shop around and find the best available product and service. Many options are available for purchase, so buying the wrong product is a real possibility without knowledgeable assistance. Do as much research on different companies and products before contacting any company or agent.
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