In a free market economy, virtually the only given is uncertainty, especially regarding income. Fortunately, individuals can take steps to raise the probability that income streams will be continued even in the event of a disability. Here are a few measures you can take to safeguard the well-being of yourself and your loved ones.
- Work with a financial advisor in order to invest your money wisely. If safety is your concern, formulate a dependable, conservative strategy.
- Save at least enough to cover your expenses for 90 days. Providers of private Income Protection Insurance usually ask the beneficiary to wait 30 to 90 days before receiving the benefit.
- Conduct yourself wisely. Providers of Income Protection do not pay in the event of all forms of drug and alcohol abuse, any self-inflicted injury, or undisclosed hazardous activities.
- Don't forget about government disability. The approval period for Social Security is three to five months. Thus, a good income protection plan should allow for this time.
- Get a quote for income protection insurance. Your financial adviser can help you with this plan as well. He or she can use his or her experience and expertise to make sure you are getting the appropriate plan at the cheapest price.
- Make sure your advisor is independent. Not doing so leaves you open to the danger that the income protection will be for the insurance company and the advisor instead of you.
- Use the above strategies to enable you to defer payout for as long as possible. The longer the deferral period, the cheaper the income protection will be.
- Realistically assess your needs and buy enough income protection to cover them.
- Learn to live within your means. Learn to set a budget and stick to it. Income protection and the protection of assets starts with your own continence.
The requirements for an income protection plan payout are:
- Inability to produce income by doing the job normally done.
- Inability to do similar work.
- Inability to do paid work.
Finally, it is advisable not to expect too much from income protection insurance. Private plans pay out 60% of earnings, so adjust your spending and investments to compensate for this fact. There is a one in three chance that the average worker will become disabled in his or her lifetime, so a prudent income protection strategy is essential. With smart planning, one can increase the likelihood of peace of mind for years to come.