Without a reliable source of income, essentials like food and shelter become difficult to obtain.
Whether a family has one breadwinner or two, the cash flow must be protected.
Since the concept of insurance first came into widespread use in England and Western Europe, people all over the world have seen its value.
Income protection insurance comes in many forms.
The most common are life insurance, disability insurance, critical illness insurance and long-term care insurance.
Life Insurance This form of insurance is designed to protect against the timing of death.
Life insurance cannot protect against the risk of death, which is an inevitability.
The policyholder is guaranteed a death benefit based upon the coverage amount.
The death benefit can be taken by the designated beneficiary of the policy, either in the form of a lump sum or a stream of monthly income payments.
The proceeds from life insurance can be used for a variety of purposes, including leaving extra money to charitable causes.
Disability Insurance When a provider is injured and cannot work due to the injury, disability insurance provides the income he loses.
The monthly payments from the policy can be used to cover basic expenses as long as the injury persists.
The chances of not being able to work due to disability for longer than 90 days is approximately one-in-three.
Average Canadian workers are seriously disabled at least once on average before they reach retirement age.
Critical Illness Insurance Under a critical illness insurance plan, the policyholder is paid a lump sum benefit if he becomes seriously ill.
This benefit is paid within 30 days of diagnosis.
The list of diagnoses covers everything from heart attacks to needing an organ transplant.
It is especially popular in Canada and other countries that have national health insurance coverage plans.
The policy can cover miscellaneous expenses, such as the costs of transportation to and from a hospital.
Long-Term Care Insurance This is for protection against the risks associated with end-of-life planning.
Moving into assisted living is a cost covered by this type of policy.
Like the income from disability insurance, long-term care insurance income is tax-free.
It is designed to reduce the burden of emotional, physical and financial costs associated with aging.
All long-term care services are covered under this policy, whether they are provided by family members or professionals.
Income Security Insurance is essential to the security of income.
There are several tricks that can be used to further increase the coverage benefits.
When inquiring about different policies, ask about cost-of-living adjustments.
This is particularly important for life insurance.
Inflation can eat away at the value of the death benefit.
A cost-of-living adjustment can protect the value of the death benefit by adding to it in nominal terms, year by year.