We often get asked by clients if income protection is the same as life insurance and the answer is no. Life insurance can only be paid out when you die or are diagnosed with a terminal illness. Income Protection insurance is a simple and comprehensive way of coping financially if you were unable to work due to an illness or injury that is covered within the policy terms & conditions.
Life Insurance
Life insurance policies pay out a lump sum if you pass away during the policy term or if you are diagnosed with a terminal illness and are not expected to live longer than 12 months.
Life insurance is really there to help provide financial support to your loved ones to they can pay the bills and continue to live how they always have. It could help them pay for the funeral, or pay off the mortgage, clear any debts, cover childcare or just general living expenses. With life insurance policies, you choose how long your policy lasts and once it is finished, your cover will stop and won’t pay out if you die. The policy will also end if you stop paying the premiums or a successful claim is made. The policies usually have no cash-in value at any time.
Income Protection Insurance
Income protection insurance policies give you a monthly sum if you can’t work because of illness or injury. Depending on your policy and if your claim is successful, you would receive payments until you are fit to return to work or until the end of the policy term. The policy is designed to cover a large percentage of your lost earnings so that you can carry on living your normal life as much as possible.
Like life insurance, the policy is also a safety net for the other people who financially rely on your salary. The cover is usually paid in monthly instalments until the end of the policy term. If you stop paying you premiums your cover will stop, and the policy has no cash-in value at any time.
No one likes to think about the death of a loved one or having to protect your income because of illness or injury, however, it is one less burden for the family to carry if there is a financial plan in place. Contact us and we will be happy to have a discussion on your life cover and income protection arrangements.
*Please note: These types of plans typically have no cash in value at any time and cover will cease at the end of term. If premiums stop, then cover will lapse.