Life insurance and income protection insurance both are intended to cover you and your family during a financial crisis in different ways. Before deciding which coverage or policy works best for you, it’s essential to understand how they work.
Some of the questions that determine the need for life insurance and income protection insurance, or both are: Do you work full time? Do you have to pay a mortgage or rent? Do you have children? Answering these questions will help you in your decision making.
Understanding the Difference
Life insurance, also known as death cover, pays a lumpsum of cash to your beneficiaries if you pass away or diagnosed with a terminal illness. Your recipients can use the money for anything they choose, such as school fees, holidays, loan repayments or living expenses.
Income Protection Insurance
Income protection pays out regular cash that can replace 75% of your income if you can’t work due to accidents or illness. The primary function of the income protection policy is to ensure your income and help you with your expenses until you can return to work or retire.
Comparing Life Insurance and Income Protection Insurance
Life insurance and income protection insurance both are equally important. There isn’t an answer to which one is best. However, a few factors will help you decide which one is suitable for you.
If you are married and have children, life insurance is a must to secure the future of your family after you pass away. However, if you are single and work full time, income insurance is best for you. The type of insurance cover you need depends on the situation of your life.
Income policy is worthier as you can enjoy the payouts if you are in need depending on the waiting period you choose whereas life insurance can only be claimed by your beneficiaries after you die so you won’t benefit from life insurance until you are alive.
30% of heart attack patients are aged 35 to 60, 38% percent of middle-aged people are suffering from a stroke which means there are high chances of being ill or injured and the result is being unable to work. In these cases, Income Protection Insurance comes to the rescue.
Choosing one of these two policies is really difficult; both are valuable investments. Many would say Income Protection is more important while others say Life Insurance. Overall, both the policies will be valuable, so long as it covers you and your family.