Most people know how important it is to have life insurance and to protect your assets, but an often overlooked aspect is protecting the most important asset you have – your income.
Most people heavily depend on their monthly income to provide for their family, pay off loan debts and keep up with other financial responsibilities.
The important thing to remember is that you can never know what could happen – and have to be prepared to handle your family’s financial situation if something were to go wrong.
Just ask yourself a few simple questions – what would you do if you’d become ill and wouldn’t be able to work for a few months? Would you still be able to provide sufficiently for your family?
A month or two may not seem like a lot of time – it could be a relatively minor mishap as a severe case of the flu or a broken leg, something that would keep you from working, and that could still have disastrous consequences on your family’s financial state.
What about an even worse scenario – if something was to happen to you and you wouldn’t be able to work again, either because of a permanent injury or death – how would you provide for your family?
Also, would you be able to set up your kids for their future – pay for their education?
Think about these questions and then it will become clear to you if you need health insurance. Basically, if you don’t have a really significant amount in savings and are dependent on your consistent income to meet all of your financial responsibilities, income protection is one of the most important things in making sure your family will be taken care of, no matter what.
There are plenty different plans you can choose from, but you should make sure that you got all the possible scenarios covered.
That includes short term income replacement – when you would be insured for the full or at least a significant amount of your monthly income and would be compensated for the period that you’d be unable to work.
You also need insurance in case something were to happen that makes you unable to work ever again – your family would have to be provided for, so insurance with a payout in the case of disability of death is also very important.
Finally, consider that not all expenses are direct – for instance, even if you wouldn’t consider your children’s education a regular expense, you still have to save money in order to provide for them, so you have to have an income protection plan that would cover the costs that will arise in the future – that, for instance, if something were to happen to you, your children would still get the proper education.
These are just a few examples of why income protection can be such a valuable asset – after all, in the year 2013 you can never be sure about your financial situation because of the still unstable economy, so protecting your family in as many ways as you can is critical.
Income protection is just another way of getting a little safer – this way you can create at least a few safety nets that will cushion the financial hit if something unexpected were to happen.
Romayne Warner is a full time self-employed blogging fanatic. Obsessed with finding small ways to save money every day, she enjoys sharing her frugal lifestyle tips and tricks with the world, she regularly writes about saving money.
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