How Much Does Income Protection Insurance Cost?

Income protection insurance is a cover which makes sure that you and your family is protected financially in case you are unable to go to work due to some illness or injury. However, this insurance does not cover you in case you lose your job. This is a cover for short term disability to go to work say for example up to a maximum of 2 years. The insurance company in such events covers up to 85% of your income. However, maximum limit applies and is as high as $20,000 per month. The cover that you will get further depends on many factors.

If you have income protection insurance and suffer with some illness or disability that prevents you from going to your regular work then you are eligible for a regular income benefit by the company after your chosen waiting period. The waiting periods that you can choose are:

  • 30 days
  •  60 days and
  • 90 days.

The benefits that you may receive are given every month as arrears and it may also be complemented by many other payments that you may receive albeit from different sources like;

  • Similar type of policies
  • Money claimed as worker’s compensation
  • Schemes for accident compensation and other
  • Statutory benefits

The next big question is how much will the income protection cover cost and is it necessary? Well! Income protection gives you financial support in uncertainty of the job due to illness or injury. Thus it may be a good idea to protect yourself and the family financial against such situation. However, the cost of the income protection insurance will depend on many factors like:

  • The age of the insured
  • The gender of the insured and
  • The waiting period the insured chooses and the last but not the least
  • The type of cover you apply for, standard, white collar, professional or special risk when checked on the occupational scale.

Generally the occupation is covered as standard, until unless you have been proved eligible for professional or white collar scale. You also need to prove that you work in an occupation which should be considered under special risk in your insurance. To calculate the premium:

  • Identify the age, sex and waiting period and multiply it with your occupational profile
  • The percentage of the income that you want in dollars like 70% of the income
  • Multiply the factor you got with the amount of insurance cover and then divide it by 1000
  • The result is then divided by 12 to give the monthly premium amount.