If you sustain a debilitating injury or illness at any point in your life, then your financial security is going to become even more important to you. After all, your incapacitation might not only make it harder for you to earn a living, but also place extra financial burdens on you as you work to afford medical bills, rehabilitation costs and everyday living expenses. For a solution to this potential problem, many people turn to income protection insurance.
However, income protection coverage is not the same thing as life insurance, which many people don’t automatically recognize. Your income protection coverage will protect you while you remain alive and can ensure that you go on to live as secure a life as possible despite any physical setbacks. That’s a lot different from the death benefits and lifetime cash value provided by life insurance.
What is Income Protection Insurance?
You never know when an accident or illness might come along in your life and impact your ability to provide for yourself. For example, what happens if you are involved in a bicycle accident one weekend, sustain extensive injuries and will have to face a few months of surgeries and rehabilitation.
While you will recover, the unfortunate fact of the matter is that you won’t be able to work while you are undergoing treatment. During this time, your regular paycheck won’t come in and that could put you on the line for a lot of financial strain. After all, you might have a mortgage, car notes, student loans and other debts to pay, not to mention your everyday costs for food, utilities and other necessities.
What you don’t want to do is drain your bank account just because of this accident. Income protection insurance will provide you with supplementary income that you can use to replace your missing paycheck. Your plan will pay up until the time you are adequately recovered, or until the policy reaches its end date.
Why Life Insurance is Different
At its core, life insurance is designed to provide financial protection to a designated beneficiary (often a family member) in the event of your death. It is designed to pay the bulk of its funds (its death benefit) after your death. Therefore, it will provide no assistance to you while you remain alive.
The only living benefit that you might receive from your life insurance policy would be a cash value benefit, which is included as part of certain whole life plans. The cash value account can provide a source of income while you remain alive (while continuing to fund your death benefit). However, it takes cash value policies a lot of time to mature, and they might not provide the consistency of coverage offered by an income protection plan.
You should always consider having both life insurance and income protection coverage in conjunction with each other. At Brokerage Solutions Inc. we are committed to working with you to determine how best to combine these benefits to your advantage.