Health Insurance—What Is Income Protection Insurance?

When you are considering the type of Health Insurance to purchase, you may come across income protection insurance.

What is this insurance and is it really necessary? Income protection insurance is also known as permanent health insurance.

The plan is meant to provide you with a specified amount of monetary compensation should you be unable to work due to illness.

Health Insurance: Highlights

Below are some highlights of the cover:

Your occupation will largely determine the premiums you will pay and terms of the income protection cover. If you are in an occupation classified as high-risk, you will pay higher premiums.Occupations classified as high-risk as usually those that involve dealing with heavy machinery and where workers are constantly in danger of hazards like falling bricks, electric shocks, fires, falling bricks, etc.

There are many cover options you can go for. Getting the right cover from the beginning is important to ensure you will be adequately compensated in case you cannot work. Compare the maximum benefits that you are likely to get from different insurers for your current level of income.

Most insurers have a waiting period before compensation is done. The period can range from 7 days to 12 months. Majority of the providers have a minimum waiting period of four weeks before they can provide compensation.

Health Insurance: Know Your Needs

When selecting a provider, consider your income situation and your employer’s policy with regard to being unable to work. If you will still get income even if you are unable to work, a longer waiting period will not hurt you. If you are self-employed, it is advisable that you take a cover with a shorter waiting period. However, this will mean that you will pay higher premiums. Basically, the shorter the waiting period, the higher the premiums, and vice versa.

The cover usually pays up to 60 percent of the income you were getting before you became unable to work. The income is available tax-free if you apply for it by yourself instead of letting your employer apply for it on your behalf.

Understanding the above factors will help you when you are looking for permanent health insurance.

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