Income Protection Insurance If You Lose Your Job - What Are Your Options?

Copyright (c) 2014 Kerrie Peacock

Before getting into any legal contract with an insurance company, it is important to know what the terms and conditions of the contract stipulate. You may find it difficult to read everything written in the contract because of the many technical details it contains. As you do your research on income protection insurance in case of loss of employment, there are key details to be clear about. These will help you make an informed decision:

The Market

Income protection insurance is designed to ensure that in the event that you are unable to work because of unforeseen circumstances like sickness or accidents, you still get an income. This liberates you from the hassles of making ends meet during such an unpredictable period. Although you may not get your full salary, you will receive an amount that can sustain you during the recovery period. There is no known income protection insurance that covers loss of employment. Nevertheless, there are several ways to safeguard one against such situations.

Available Options

There are income protection plans that are geared towards alleviating a person when they are rendered redundant. This may not be a comprehensive cover such as when the cause is injury. While in regular income protection insurance, you could receive up to seventy-five percent of your salary, in a redundancy cover, you get a relatively smaller amount.

In your income protection insurance plan, you can choose a provision for unemployment. This means your financial obligations such as mortgage are taken care of in case you lose your job. The feature only applies if the mortgage was covered by the same insurance provider. However, this is only for a limited period of time and you will need to get alternative means of paying your mortgage.

Another way to get indirect cover in times of unemployment is to get an unemployment waiver. This means that you will pay your premiums at a lower rate. This will help you cut the expenses you would otherwise be obligated to pay when employed. As it is with the unemployment benefit, the waiver is only given for several months, and you will be required to demonstrate that you are seeking for a job. This waiver is mostly given in circumstances such as maternity, which are not under your control.

Getting Covered

One of the main things you want to consider before getting into an income protection contract is the cost. You need to get something that will be worth the amount you spend on it. The cost factor should go hand in hand with the features provided in your insurance cover. Get to know what situations it will cover and the duration during which you will benefit from this investment. For instance, the redundancy benefit is very different from the unemployment benefit. Understand the details of each feature and what additional criteria you will be required to meet.

It is also advisable to find out the extent to which the policy will meet your needs. For instance, if you become unemployed due to injury, one policy will cover fifty percent of your income while another will cover up to seventy percent. Pay attention to all the intricate details to make the most of your income protection insurance.


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Kerrie Peacock is an expert in the personal insurance industry. She offers vital insights to help Australians make competent financial decisions. More professional advice can be sourced from MeCovered. To get more insight on a cover that suits you, visit http://www.mecovered.com.au/income-protection-insurance-if-you-lose-your-job .