Unemployment Income Protection
In difficult economies, unemployment income protection may sound like a great investment. As news stories of closing businesses and job layoffs are rampant, many people are understandably afraid that their turn may be next. Some type of insurance coverage that would replace lost income certainly seems like a good idea. To make the coverage more attractive, the companies offering these policies may include coverage for accidents and illness. But are these policies really a worthwhile solution to job loss? Of course, the agents selling the policies will eagerly explain the benefits. Think of the peace of mind of knowing that money will be provided in an emergency. Unfortunately, an agent who is paid on commission based on the policies that are sold can hardly be expected to have an objective opinion. It's not that the agent is necessarily dishonest or scheming, but his own paycheck depends on selling unemployment income protection policies.
Actually, coverage like this has been around in various forms for a long time. For example, mortgage payment protection is frequently offered to homebuyers during the mortgage approval process. The policy pays off the mortgage should the policyholder pass away. The policy may also provide disability coverage. However, financial experts usually advise people to purchase adequate term life and disability policies instead. This way, the beneficiary has more financial flexibility than if the proceeds can only be used for the mortgage. Credit card companies often offer unemployment income protection on outstanding balances. Usually the monthly fee is so much money per each $100 that is owed on the account. Though the fee may seem minimal, it can add up quickly. For example, a $5000 balance is equivalent to fifty $100s. The fee would be multiplied by fifty and this amount is added to the monthly payment. Even a fee of fifty cents would come out to an additional $25 being paid to the credit card company for this protection. How much better would it be if that $25 was going to reduce the balance?
In a tough economy, even the best employees and hardest-working people can lose their jobs. This is a sad, but inevitable fact of life. King Solomon wrote: "I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all" (Ecclesiastes 9:11). Knowing that difficulties can happen to anyone, some people believe that the cost of unemployment income protection is worth the premium. Perhaps knowing they have this type of coverage helps them sleep better at night. Before purchasing one particular policy, though, these individuals need to do their homework. Though different policies may have similar provisions, some are certainly to be more beneficial than others. The applicant should find out exactly what the policy provides as written in the contract. Oral agreements made by an agent will not supersede the provisions of the written documentation. The applicant should be very clear under what circumstances the policy provides monetary assistance. Does the policy cover any kind of job loss? What if the policyholder was fired for wrongdoing? What is the employer goes out of business? These are important questions that the applicant needs to ask the agent who is selling the unemployment income protection policies.
Additionally, the applicant needs to know when the coverage payouts begin. Is there a waiting period and, if so, how long is it? One month? Three months? Six months? Is there a cap on the amount of money that will be provided or is there a time limitation? Knowing the answers to these types of questions will assist the applicant in personal financial management. For example, let's say a person named Jane who works on an automotive assembly line purchases an unemployment income protection policy. Because Jane works in an industry that is being adversely affected by the economy, she believed that it was prudent to purchase coverage. In the event of job loss, Jane's policy begins after thirty days. Knowing this, Jane begins scrimping and budgeting to save enough money to cover at least one month's expenses. Should she lose her job, she'll have the equivalent of a month's income in the bank to tide her over until the policy begins making payments. The policy will pay Jane for up to a year, but she continues her savings plan for additional financial security.
Ideally, Jane and the vast majority of people would have an emergency fund that equals from three to six months of the household income. Since that isn't the reality, however, many people are desperate for other solutions. For some people, buying an unemployment income protection policy may be the right solution. However, a better alternative may be to put the money that would go towards the premium in some type of liquid interest-bearing account such as a money market account or even a simple savings account. This way, the funds are available when needed without the hassle of filling out forms and paperwork. For those who are insistent on purchasing protection plans, the wisest thing to do is to be very educated on the differences between policies, to ask a lot of questions, and to carefully evaluate all choices. By taking the time to make a wise decision, perhaps the unemployment income protection policy will turn out to have been an investment instead of another drain on family finances.
Online Income ProtectionFinding online income protection policies is easy to do. Many insurance companies promote their products on websites and use proven web-marketing practices, such as search engine optimization techniques, to attract potential customers. The promotional material often lists the benefits of obtaining this kind of coverage. With the economy in a downturn, many people are concerned about losing their jobs. To them, an insurance policy that replaces lost income sounds almost too good to be true. And this is precisely why individuals who are thinking about purchasing this type of coverage need to educate themselves not only about the benefits, but also about other alternatives that may be better. These kinds of policies are often offered by mortgage and other large-ticket lenders, credit card companies, and to those who are interested in buying disability insurance. By starting out with online income protection resources, potential policyholders can learn the pros and cons of each type of coverage and be better prepared to make a good decision.
When a person applies for a mortgage or for a sizeable loan, perhaps on a new car, the lender often offers the applicant the opportunity to purchase some type of coverage in case of disability or unemployment. Credit card companies also encourage cardholders to purchase similar coverage. People shouldn't automatically sign up for this insurance; instead, it's a good idea to take the time to read the fine print and find out exactly what the insurance coverage entails, known as the terms and conditions, and the cost of the premiums. Details may be found at online income protection websites, but the wiser course may be to ask for a written copy. Financial experts often advise that homebuyers purchase enough term life insurance so that the beneficiary can pay off the mortgage and other indebtedness in the event the policyholder dies. Term life insurance is often very inexpensive, especially when compared to the premiums charged by these other types of income protection policies. The fees for credit card coverage can actually be quite expensive. That same money can be used instead to pay down the credit card balance or placed in an interest-bearing account for an emergency fund.
An online income protection policy in case of disability is completely different. A disabling accident can occur to anyone and financially responsible people are urged to plan for this possibility. If the person's employer doesn't provide disability insurance, then the individual should purchase his own policy. The apostle Paul has harsh words for those who don't take care of their families. He said: "But if any provide not for his own, and specially for those of his own house, he hath denied the faith, and is worse than an infidel" (I Timothy 5:8). Though people often make sure they have adequate life insurance, they sometimes neglect adequate disability coverage. Even when employers provide a disability policy, the coverage may not be enough. Employees should educate themselves on exactly what the employer's policy provides and purchase supplemental coverage if necessary. An online income protection calculator may help the employee evaluate whether the current policy is adequate or not.
The terms and conditions on disability policies will vary, so it's important for potential purchasers to understand the payout conditions and limitations. For example, depending on the terms and conditions, a person will receive payout under one of three different basic scenarios: 1) when current job duties can no longer be performed; 2) when similar job duties can't be performed; 3) when no job can be performed. The amount of the premium is based on several factors, including which level of coverage a person chooses to purchase. Some online income protection insurers target their products to those who earn an annual salary of at least six figures. The insurers recommend that these professionals purchase policies that provide a payout if a disabling incident prevents them from performing any job. Additionally, professionals are advised to purchase policies with a partial or residual provision that allow an individual to return to her practice or business on a part-time basis and still receive a partial payout for a time.
The payout on an online income protection policy for disabilities rarely equals more than sixty percent of the policyholder's earned income. One reason for this is that the payout is tax-free. Another reason is to provide an incentive for a person to go back to work if at all possible. Before purchasing a specific policy, individuals should look for an insurance company that is reputable and has a high rating from an insurance-rating agency. Additionally, individuals should be aware that policies often preclude coverage for pre-existing medical conditions, alcohol or drug abuse, and self-inflicted injuries. Payouts may not be immediately available so potential policyholders will want to compare different policies to see which one provides the most effective coverage at the best price. Some people may believe that disability coverage isn't necessary because of the social security disability program operated by the federal government. But being accepted for this benefit is a grueling and time-consuming process. Benefits often aren't paid to the disabled for at least six months or even longer. It's much better to have disability insurance than to depend on a bureaucratic program to start sending checks. Comparing online income protection disability policies will take some time, too, but not nearly as much. Individuals should keep in mind that adequate disability coverage is an important component of a responsible financial plan.