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Income Protection Health Insurance

Income protection insurance is very similar to disability insurance, and the two may be sold under interchangeable names. The basic idea of income protection insurance is to make sure that you are able to receive your accustomed pay even if you are unable to work because of illness, injury or other conditions.

Income Protection and Incapacity

If you are unable to work, you might qualify for income protection payments. Incapacity can be the inability to work in your own field, unable to work at all in any field, or unable to perform the activities of daily living. In other words, you might qualify for income protection if you cannot perform any job you are trained to work, or unable to take up a new occupation in any other job. Activities for daily living mean the things that you would normally do, such as dressing and caring for yourself. This could include showering, cooking, or regular shopping, among many others.

Income Protection Limits

Most income protection policies have limits based on your accustomed income. Instead of receiving that amount, you will generally only receive a percentage of what your normal salary would be. When applying for income protection insurance, check the amount the policy pays and negotiate the terms of the policy or shop for a different carrier if the default percentage is not sufficient.

Deferment Period

Most income protection policies will have a delay between filing the claim and when the benefit payments begin. Choosing a longer deferment results in lower premiums on the policy, but it also means you will have to go without income for a longer period of time while waiting on the benefits to kick in.

Proportionate Benefits

If you are able to take on limited work, the amount of your income protection benefits may be reduced proportionately. The policy is not intended to give you an early retirement, only to maintain your home and associated bills during your period of unemployment. Since the benefits are based on your income, any part-time job you get will have an impact on the amount of benefits you are eligible for. In other words, you still have the same percentage of your accustomed income, with the income protection plan only paying the difference between your part time job and what your regular employment would have paid.