If you become disabled due to a sickness or injury and are unable to work, income protection insurance helps you make up some of your lost wages. So that you can concentrate on getting healthier, it can help with the bills. Therefore to invest in income protection insurance plan Malaysia you would need to know how the whole income protection insurance system works in the first place.
What does it cover?
Income protection insurance will cover up to 90% of your pre-tax income for the first six months if you are completely or partially disabled and up to 70% for a set period of time after that.
Based on your annual earnings in the 12 months preceding your illness or injury, income protection insurance is intended to replace your lost income.
Before filing a claim, the requirements for each income protection policy’s definition of partial or total disability must be satisfied. For the definition and any exclusions, consult the product disclosure statement (PDS) or the insurer’s website.
Before the payments begin, a waiting (or “delayed”) period is frequently established. The most typical waiting times are four, thirteen, twenty-six, and one year. The monthly premiums decrease the longer you wait. It differs from critical illness insurance, which provides a lump sum payment in the event of a specified serious sickness.
When would we need it?
You might believe that your company will continue to pay you a certain amount of money even if you are unable to work due to illness or an accident.
However, in practice, employees typically transition to Statutory Sick Pay after six months. Few firms provide their employees with sick leave benefits for longer than a year. Find out what your employer will offer you if you take time off for illness.
Depending on your level of resources, losing a job could rapidly leave you unable to pay for necessities like utilities and your mortgage or rent. If you’re self-employed and don’t have access to sick pay, it might be very challenging.
When would you not need it?
There are a few instances where you may not need any insurance protection. One of the reasons is that you could pull through on your sick pay. As an example, you have access to employment perks that provide you with income for at least a year.
If you could sustain yourself with government benefits; only if all your outgoings are covered for. If you have savings that could last a long time then you would not need income protection because you are able to sustain yourself with your income.
Being able to retire early is also another reason why you would not need to have income insurance. Another good reason you do not need it is that when you have a family member or a partner/spouse that could support you. This would apply the same way as you own; if they are financially stable to sustain themselves and you then you do not need income insurance.
How does one purchase income protection insurance?
Different insurers may utilise quite different standards, and premiums may vary. Therefore, it’s worthwhile to shop about and conduct some research.
The best method to ensure you get what you need is to seek guidance from a specialised broker or independent financial consultant. They can walk you through the specifics of the various available insurance and ensure that you make the best decision.
They may charge a fee or receive commission from insurance companies in exchange for their services. For those whose insurance applications have been rejected, there are specialised brokers and insurers. This can be due to a medical issue or the fact that they perform work that isn’t covered by normal insurance coverage.
