Is Income Protection worth it?
In order for me to answer this question, I have to explain a few other alternatives before I am going to say “ Is income protection worth it? Or not?”.
In New Zealand, banking system drives New Zealand public to believe that “Life insurance” is a must have. You only have to think about why your bank wants you to have Life Insurance – the answer is the bank wants to know that you are going to pay the mortgage off even in the event you had died.
Not so noble after all – right? I mean your family is secondary in this formula. The bank wants to get the bank’s money back.
There are two more insurance policies for us to think about before we are going to get to answer “Is income protection worth it?”
Trauma Insurance: Trauma insurance in New Zealand pays for more than forty (40) specified major medical conditions. For instance if you were diagnosed with breast cancer (both genders can get it) you are going to be paid a lump sum specified in your policy. The problem with that policy is that it only pays for specified conditions. What would happen to you if you are sick with some sickness which is not specified in your policy? No money right? I mean you are not dead, therefore life insurance pays nothing, you are not terminally ill again life insurance pays nothing and the condition you have is not specified in your trauma policy- again you get nothing. Tough call huh? Sure it is.
Total & Permanent Disability Insurance: designed to pay you a lump sum in the event you cannot perform two out of five daily activities. You can read about “Total & Permanent Disability insurance” here. There are two problems with that policy:
- Not many people have.
- It is really hard to meet the definition.
I think everyone should have Total & Permanent Disability Insurance for the amount of the debt the person has. The reason I think that is based on – if your mortgage and other major debts are paid off it become less stressful to manage.
The good part about Total & Permanent Disability insurance is that it is the cheapest type of insurance. I mean you always get what you pay for – right? The only reason it is cheap is based on probability of factors that you are going to end up being totally and permanently disable.
How would you answer now? “Is income protection worth it?”
Income Protection Insurance is the only insurance which pays you in the event you are seriously sick. Now think about the following keeping in mind the previous two insurances we have discussed: Yesterday for example, you were diagnosed with breast cancer – your Income Protection is going to pay you specified by the policy amount.
Think about Income Protection Insurance as your only financial security. The policy allows you to future proof yourself from literally anything. The beauty of the policy is that it pays for any condition. There is no need to specify a condition. Income protection benefit is paid if you temporarily disabled.
I hope by now you have formed the answer for yourself and know that if one of your friends is going to ask to ask you: “Is income protection worth it?” – you would be able to answer it saying “yes” or possibly “there is no better type of insurance” which covers my income in the event I’s seriously sick or diagnosed by something doctors failed to understand yet.
If you have questions about how your Income Protection should be set up please let me know your age and your current level of income to get a few comparative quotes from leading New Zealand insurance companies.