Income Protection

Income protection is essential for almost every working person today. Unless you are wealthy, doing without a salary is just not possible. More than half of Americans live paycheck to paycheck, meaning, they are in financial trouble if they are off work for a while.

Nearly 60% of injuries happen off the job; that means they are not covered by Workers' Compensation. Think of the car accidents, home accidents, ladder accidents, machinery accidents that occur all the time. These are common events that make income protection necessary. Should they keep you off work, they become a threat to your security and to your family's future.

Definitions Determine Benefits

If your disability insurance policy calls for benefits for "partial" disability, it means you don't ever have to be declared totally disabled to collect benefits. Another term to become acquainted with is "residual," which indicates the company will pay you a benefit for a partial disability. The recovery section in your contract indicates how long benefits will be paid when you are back at work full time, and still have a loss of income.

Always read contracts carefully, and always make sure you understand the terms before signing. The cost of living adjustment (COLA) increases your benefits after a year of disability. Be aware of any section regarding step rates, which provides for an initial level of disability insurance rates, then steps up, or increases, as you near age 65.