Why income insurance is an important part of protecting a subcontractor’s assets.
Subcontractors find themselves in a unique position. They don’t have a boss or a regular paycheck, meaning that they don’t have access to workers’ compensation or sick leave. If they become too sick or injured to work, they don’t have a financial “cushion” upon which to lean on. That is why many purchase income insurance, or “income protection insurance.”
How Income Protection Insurance Works
Simply stated, if you are hurt or ill and unable to work, income protection insurance can replace as much as 75% of your income until you are able to go back to work. This comes in handy for feeding your family and paying bills while you are unable to produce income through working.
Every income protection insurance policy has three parts:
Benefit Amount
This is the amount of money you will
be able to collect if you cannot work. Usually, it is 75%, but some people opt to save money in premiums by decreasing the benefit amount.
Waiting Period
This is the period of time from when you are unable to work until you are allowed to start collecting your benefits. Typically, this works out to thirty days.
Benefit Period
This is the amount of time you can be out of work and still collect money. Most policies are written with a benefit period of between two and five years. Some are written with a benefit period that lasts until age 65.
Why “Subbies” Purchase Income Protection Insurance
As mentioned above, must subbies don’t have access to any kind of compensation if they are injured or sick. Even those who have saved up a tidy sum of money can run through it a lot faster than they thought if they are suddenly out of work for an extended period of time.
Income protection insurance has emerged as one of the more popular ways for a subbie to protect themselves in case of illness or injury.
Call Approved Financial Planners
If you are a subcontractor in Perth who would like to learn more about income protection insurance or other alternatives, call Approved Financial Planners on 08 6462 0888 for an individual, no-obligation consultation. You may or may not opt for income protection insurance, but it pays to know your options.
