GOT IT COVERED?

Know the difference between income protection and disability cover

Nobody can tell what the future holds, but everyone can plan for it to the best of their abilities.

A person’s whole life is dependent on their ability to earn an income.

What happens when that ability is lost, leaving you unable to work?

How will you take care of your family if you don’t earn an income?

This is why people take out income protection as well as total and permanent disability (‘TPD’) cover, but why would you need both?

What’s the difference?

INCOME PROTECTION

This is a monthly payment that replaces your income when you are injured or fall ill.

Generally speaking, income protection is meant to keep you afloat in the short term, until you can return to work.

Income protection policies usually offer up to 75 per cent of your gross income for a maximum period of two years or to the age of 60.

Some insurance providers may offer extended periods of cover, coupled with the option of longer waiting periods.

TPD COVER

This is a lump sum, paid to you if an injury or illness causes a total and permanent disability preventing you from working ever again.

Insurance providers may have different definitions for TPD, so make sure you check what they consider to be ‘total’ and ‘permanent’ before signing on the dotted line.

Combining these insurances ensures you’ll be able to look after your family, pay existing bills and service new bills (like medical expenses) if the worst happens.

The information in this article is provided for general information purposes only and does not constitute financial advice. Consult with a registered financial advisor if you think this information is relevant to your unique circumstances.