So much of life is focused around work and careers, but often the routine of a job can lull an employee into feeling as if employment will always be there.
Too few employees consider the consequences of long-term job loss. Some interruptions in work can be controlled, such as level of performance and improved skill sets, but illness and disability can occur suddenly and disrupt or end an employee’s career. Which is why it’s important to consider income protection.
Gaps in insurance
There are many costs associated with illness and disability beyond what’s typically covered by medical insurance. A healthcare insurance program may offset much of the medical costs, but the employee may still be required to cover deductibles and may continue to pay a mortgage or rent, car loans, credit cards, or student loan debt.
Many employers provide sick leave to their employees, but sick leave is typically meant for short-term illness, such as routine sickness like the flu or colds. According to the Bureau of Labor Statistics, the average full-time employee receives between eight and 11 sick days per year which is grossly inadequate to cover the expenses of prolonged illness or disability.
The employee will continue to receive a salary for these allotted days, but how can employees continue to pay their bills if they can no longer work? Some employees may transition into other careers they can manage, but many may never be able to continue working.
Employees might also have access to trauma insurance, which is paid in the event of a serious illness or disability. Trauma insurance can sometimes be a great benefit. However, it is paid in one lump sum, may only cover certain conditions, and may not provide enough money to continue paying a mortgage or rent, car payments, and bills.
Using income protection
Income protection insurance can be a way to provide security in the event of serious illness or disability. Income protection provides a portion of your income, typically 75 percent, that is paid out monthly similar to receiving a regular paycheck. Income protection is set on a scheduled period of time where payments are made until the coverage ends.
Like other forms of insurance, it may be confusing to determine which plan will best suit your needs. There are website resources available when you are trying to compare income protection insurance. There are many factors to consider when choosing an income protection plan such as percentage of salary covered, how often are payments scheduled, and what is the time period of coverage. As an added benefit, many income protection plans can be used in conjunction with existing sick leave and trauma insurance coverage.
Far too few employees seriously plan for an extended illness or disability. It can be a difficult realization for an employee to consider whether they will be the one in four who will be disabled before 67 years of age. Sick leave and trauma insurance can be beneficial, but both may be inadequate to cover long term and recurring expenses. Sick leave is more suited for common and curable illness, and trauma insurance may have stringent limits and requirements.
Income protection insurance can provide a portion of an employee’s salary over a longer period of time. Income protection insurance can provide security regarding unforeseen events. There are a myriad of options that exist as standalone or supplemental plans too, so it’s important to compare income protection insurance before making a choice. Find the best income protection for you at iSelect.