income protection vs unemployment insurance

6 Facts About Income Protection Insurance You Might Not Know

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Income protection insurance can give you peace of mind when an illness or injury prevents you from working. People commonly insure their cars, homes, boats, and other valuables. Why not insure the income you use to pay for those things?

What Is Income Protection Insurance?

Income protection insurance is insurance to protect a portion of your income. If you are unable to work because you are injured or sick, the insurer will pay you part of your gross income.

How Much Will Income Protection Insurance Pay?

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Most income protection insurance policies replace up to 60% of your gross income. Coverage varies with the insurer. But you may be able to boost your coverage with an insurance rider—or an add-on for additional benefits. An insurance rider will increase your premiums. For details, read our post How Much Does Disability Income Insurance Pay?

Income Protection Insurance vs. Disability Income Insurance

Income protection insurance is another name for disability income insurance. The plans provide insurance that protects part of your income when qualifying physical limitations prevent you from working.

Income Protection Insurance vs. Social Security Disability Income

How do income protection insurance and Social Security Disability Income differ?

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  • Acquiring it – You can purchase an income protection insurance policy, but you cannot purchase Social Security Disability Income (SSDI). SSDI is government-sponsored protection for workers who have contributed to SSDI long enough. SSDI deductions are usually withheld from employee paychecks.
  • Qualifying for it – Basic qualifications for an income protection policy include reviewing your health history and lifestyle during the application process.
  • SSDI requires you to prove the following:
    • You cannot work in your current occupation
    • You cannot adjust to alternate work
    • Your disability will prevent you from working for at least one year
  • Disability length – You can receive income protection insurance if you are partially or temporarily disabled. But SSDI requires total disability for at least one year.

The Council for Disability Awareness published disability statistics showing that most illnesses that require time away from work are not covered by Workers’ Compensation or SSDI. And benefits provided are often not enough to meet the injured person’s necessary expenses.

Income Protection Insurance vs. Employer-Sponsored Disability Insurance

An income protection insurance policy is private insurance—separate from employer-sponsored short- or long-term disability insurance. You can receive income from both policies, but the terms and payout may differ. Compare your options to decide how much additional coverage you need.

Income Protection Insurance vs. Private Unemployment Insurance

Income protection insurance and private unemployment insurance have different purposes. Private unemployment insurance is not common, and few insurers provide it.

  • Income protection insurance – Provides coverage if you are ill or injured and unable to work
  • Private unemployment insurance – Provides coverage if you are unemployed due to layoff, job closure, or other qualifying reasons. It supplements unemployment insurance

Interested in Income Protection Insurance?

If you are interested in income protection insurance, Hunt Insurance of Raleigh can help. We will explain plan options in simple terms and give you a hassle-free quote. Contact us by phone, text, or our contact form to request a free consultation.