Income Protection Insurance? Do you really need it

Income protection

Is your workplace safe?  Do you work in a place where there is a greater chance you getting severely injured; maybe lose a limb or even die?

If the answer is yes, an income protection insurance or also known as disability insurance can cover you while you recover from your injury. The question of whether you need income protection or not purely depends on how safe you feel with whatever you are doing at the moment(it could be your profession, hobby or something else).

Income protection

If the organization you are working for does not provide disability insurance, you should request them to make it available or buy it by digging in your pocket. Ideally, if an employee got injured at work, the organization should provide a paid leave along with compensation for the long term damages sustained by that individual. But, unfortunately, sometimes this is not the case.

Types of Income protection insurance

Depending on whether your decision to obtain an Income protection insurance is planned or merely a precaution for future, there are two types of Income protection insurances that you can buy. And they are short term and Long term Income protection insurance.

1. Short-term Income protection insurance/Disability Insurance

This insurance policy is beneficial for people with minor/non-life-threatening injuries like bone fracture, surgeries, etc. It covers the candidate for 2-12 months.

Some women opt to buy this insurance when they plan to have a child. Maternity leave is generally paid. Women living in states other than California, New Jersey, and Rhode Island do not have an assurance of getting paid while they give birth to their child. Here is where a short term income protection insurance come to rescue.

The person recovering from an injury or a pregnant woman(during and few months after pregnancy) receives 70-80 percent of their gross income from this policy.

2. Long-term Income protection insurance/Disability Insurance

This policy works best for people who have suddenly suffered from a long term life-threatening disease/injury. A professional athlete bursting his/her knee is one such instance where a long-term income protection insurance can come handy.

Although an athlete is considered to be self-employed, they still earn a decent amount of money without which they will become financially paralyzed. During the recovery phase, an athlete having a long term income protection will receive 60 percent of his/her gross annual income.

How much does Income protection insurance/Disability Insurance cost?

The cost of premiums entirely depends on the candidate’s income potential. People with higher income pay a higher premium and vice versa. Usually, the cost of the policy is 1 to 2 percent of the candidate’s gross annual income. This may vary with their age, sex, health, etc. Generally speaking, the older the candidate, the higher is the premium.


Instead of thinking about an Income insurance policy from a traditional sense, you should shift your mindset a bit. Life is only going to get harder and things don’t always move so smoothly. Instead of taking a chance, you can secure your future by getting this policy which does not cost a lot.


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