Interesting Facts About Income Insurance
Sound financial planning is a must for everyone today and making a start when you first begin earning money is a wise move
. But as the costs of living continue to rise and the costs of not having an income can be frightening, having sound income insurance becomes not just sensible but essential.But like most insurance areas, income insurance can be and usually needs to be tailored to your situation. Your career can play a significant role in the length of cover you are entitled to. Whereas many people take a policy which offers say 75% of their income for a period of two to five years, some people take insurance income until they reach the age of 70. This involves different premiums of course but certainly a range of comfort zones depending on your needs.
In most cases the maximum payout is capped at 75% of your income. There are interesting taxation factors at play. Usually your premiums are tax deductible but any payouts you may receive are usually taxed. It"s important to know these facts - and any others associated with income insurance - and that"s where your financial planner can be of great assistance.
Income insurance can include other items apart from a replacement income. You pay extra but you can add the following items as well as cover for to your income policy. You can have a death benefit, a disability payout as well cover for major surgery including a transplant and any cosmetic surgery required should you suffer disfigurement due to an accident.
If you want to reduce your premiums you can do so by opting for a longer waiting period. This is the time from when your policy begins and you start paying premiums until the time when you are eligible to make a claim. So if you sign the policy and want it to provide cover within a few weeks, you will pay a higher premium than someone who opts to have your eligibility to claim not commence for a year or even two. You are taking a risk that you won"t need to make a claim in that waiting period but you will pay a lower premium and after all, risk is what insurance of all types is about.
There are two types of payout should you make a successful claim. There is a fixed payout known as an "agreed value" or there is a negotiated payout covered in an "indemnity contract". The agreed value speaks for itself. At the time of taking out the policy you agree to the amount you will receive should a claim be necessary. The alternative is to negotiate your payout only when your claim is being processed. Different amounts and different premiums apply and again, advice from your financial planner is highly recommended.
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