Everything You Need To Know About Income Protection Plans

By Bank Bazaar | December 6, 2017

Have you ever asked yourself who will look after your family if you are not around? Let us tell you what Income Protection Plans are and how they work.

Have you at any point of time asked yourself who will look after your family if you are not around? This is where Income Protection Plans come into the picture. Let us tell you what these plans are and how they work.

What are Income Protection plans?

Income Protection plans provide a regular income to your loved ones. A plan like this will ensure that they do not suffer financially even if you’re not with them.

How do Income Protection plans work?

You know how Term Insurance plans work, right? In the event of the demise of the insured person, his family or beneficiaries receive a lump sum amount as a death benefit from the insurance company.

But what happens when your beneficiaries are unable to make this lump sum amount stretch over a long period of time?

Additional Reading: Popular Online Term Insurance Plans – 2017

That’s how Income Protection plans are different:

Income Protection Plans allow your nominees or beneficiaries to receive monetary payouts at flexible intervals according to their choosing. Your loved ones don’t need to worry about a lump sum amount being squandered away or misused.

In simple words, Income Protection Plans give your family a replacement income.

For how long will your beneficiaries receive the money?

Your nominees will get a regular monthly income (commonly called a monthly benefit) for the duration of the insured person’s working life, until the age of 60 years.

To understand this better, here’s an example.

Say you get an Income Insurance Policy for your family when you are 30 years of age. At the age of 40 years, you meet with an accident and are no longer around to provide for your loved ones.

Your Income Protection plan allows your family to receive monetary benefits every month and this will continue for the next 20 years, by which time, if you were alive, you (the insured person) would be 60 years old.

Additional Reading: Types of Term Life Insurance

Who should get Income Protection Plans?

  • You should consider getting an Income Protection Policy if you want to ensure that your loved ones get a regular income in your absence.
  • You are the primary breadwinner in your family.
  • Your loved ones are dependent on you for financial stability.

What will your family do if the amount they receive today is not sufficient to cover tomorrow’s cost of living?

In case today’s income does is not sufficient to cover tomorrow’s cost of living, some insurance providers that offer Income Protection Plans choose to increase the monthly income payouts by a fixed percentage.

We all work hard to give our families a certain lifestyle and many of us have loans (perhaps a Home Loan or Personal Loan) and other dues that we need to pay off. Your family shouldn’t suffer because of an unfortunate event that might result in a loss of income. The right insurance policy will secure your family’s financial future and make sure that they are taken care of.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.

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