Factors affecting Income protection policies

Anything which stops one from getting paid by their regular occupation can be used to claim the income protection insurance, which makes it the most desirable policy to be taken by anyone who wants their life and their family’s life to be secured against all uncertainties.

There are certain factors that affect the type of insurance policy one has to take. They can be classified broadly as following.

The current income:

 Income protection

To take any policy, the most important factor to be considered is the present income structure of a family. Depending upon that, one can take a policy which is of higher cost, or one can just go for a policy which gives minimum security in some uneventful occurrences of life. However it is best to consult an agent rather than just taking the advice from a friend or relative, since the policy which suited for them may not suit for oneself as they may be differences in income levels.

The cost of living:

Cost of living is also an important factor to be taken under consideration, since the more cost of living of a family is the costlier the expenses become when we can’t bear them. So, the cost of living has to be taken into account and the plan has to be chosen accordingly.

Tax deductibility:

The amount of tax that can be deducted by taking the policy is also a main factor in choosing the plan for someone who is taking a policy for investment purposes. The discussion of this topic has to be done with an expert, so that no ambiguities arise after taking a policy. To cut tax, policy taking is the best method since it is like getting two birds for a single shot. One will get the claim if anything happens and if everything goes well, which is what everyone wants, the tax can be cut effectively.

The policy must be taken up after considering all the factors of income protection plan. The plans are short term and long term. Long term policies are meant for people desiring to safe something for their retirement or kids. However, short policies are one that is taken by working professionals to use the amount to grow in future later on. The amount is either credited to the beneficiary account on the maturation of the policy or a fixed amount of money is credited to the beneficiary’s account every month similar to the salary. It depends on the policy taken up by the individual.

The basic fact which comes with income protection insurance is that the individual is given with the secured month-to-month wage security against the conditions in which a person cannot work due to natural reasons, accidents or illness. On the other side, if the salary of a person falls below the probable income required by the insurance carrier, some added payments for insurance cost will be given. It, however, depends on the plan taken up by the beneficiary.

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