Income Protection Insurance: What's The Best Insurance Policy For You?
There are various factors that have to be considered while deciding which is the best income protection insurance policy for you
. The most important factor that must be considered is the insured amount that should be selected. Buyers are allowed to insure a maximum of 75% of their annual gross income and this amount is tax deductible. Some buyers who have retirement benefits and other perks as part of their salary package may be allowed to insured up to an additional 8% of their annual salary.The other important factor that must be considered is the benefit period of the contract. Buyers are usually given the option to choose a benefit period of either 2 years or 5 years. During this benefit period the person insured will be able to enjoy all the paid and complimentary benefits offered by the insurance company. The maximum age till which buyers can enjoy benefits of these policies is 60- 65 years.
Buyers should choose a policy that has a shorter waiting period if they do not have paid leaves and if they have dependants. Buyers can choose a policy that has a longer waiting period if they have investments that they can dip into while they are waiting for the first payment from the insurance company. In most cases, buyers will be given an option to choose a waiting period that ranges from 14 days - 2 years and the shorter the waiting period, the higher the cost of the selected plan.
There are two types of policies offered to people who want to protect their income. The preferred type of contract is known as an agreed value policy. The second type of contract that is cheaper is known as an indemnity agreement policy. The primary difference between these two contracts is that, an agreed value policy guarantees that the buyer will receive a fixed amount that has been pre decided by the insurance company, when the policy holder files a claim where as an indemnity policy does not do so.
Before purchasing a policy buyers should also consider how long they want their income to be insured for. Long term plans are ideal for people who have just begun their careers and want to protect their families for a long time. Short term contracts are ideal for people who want temporary protection or are towards their late 40s. Before choosing an income protection insurance policy buyers should also consider how they want to pay their premiums and if they want to pay a fixed amount every month or a variable amount every month.
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