A person couldn’t be any luckier if there is a crystal ball which could predict the future. Unfortunately, there is none or any other kind of machine that would give us an exact prediction of what our future may look like. We are and will always be faced with all the uncertainties of future.

But on the brighter side of life, there are a number of things we can do to prepare for the future, one of which is insurance. There is a gamut of insurance products that one can choose from to fit a certain need. One of them is long term income protection insurance which could assure and provide coverage for a person if afflicted with serious illness or injury. This insurance could help you maintain a certain degree of semblance from your old life before the accident or illness as you will have to receive a certain amount of financial help every month.

Long term income protection, as opposed to short term income protection, can provide you with a benefit every month until you reach the age of retirement in case you sustained a severe case of injury or illness and which renders you unable to work. The total of the benefits you can get is around a maximum of 60% of your total annual gross income.

How to Compare Long Term Income Protection

As most insurance policies presented in the market nowadays, it is wise to weigh every factor first before making a final decision. By knowing all the benefits and restrictions a policy bring, you will be able to decide clearly if a certain product is the right one for your needs. Moreover, being in the know makes it easier to pay a higher premium which could give you better benefits in the future. On the other hand, not knowing your rights and benefits could cause more headaches in the future. In order to give you a better understanding of what long term income protection is the pros and cons of getting this type of insurance are listed below.

Benefits of long term income protection:

It pays a regular income in the event of a severe illness or injury that would render you unfit to work. This ensures that you will still be able to pay any financial obligation you might have, like mortgages and medical expenses even in the event of unemployment. The coverage for this type of insurance could extend until you are declared ready to return or re-enter the workforce. At best, the period of cover could extend until the retirement age of 60-65 depending on the coverage of policy you chose.

• Most of these policies are flexible. You could decide when you would like to receive the payments. The length of the waiting period could be between 90 days to 180 days. You could even choose which type of health care you can avail of. This flexibility gives you and your family the liberty to make necessary changes should the problem persist.
• Most of the policies offered are tax deductible. The benefits paid to you are deducted from your income.
• You could receive benefits of up to 65% of your total annual gross income. The benefits you receive are also linked to the Retails Price Index meaning that their value escalates as time goes by.
• Some long term income protection insurance offers additional benefits like temporary accident cover and retirement protection benefit. The temporary accident benefit pays you a certain amount within 90 days while waiting for the policy to kick in. On the other hand, the retirement protection benefit pays up to 10% of your base salary upon retirement

Drawbacks of long term income protection insurance:

• Since insurance has something to do with risks, you could find yourself paying a monthly premium for a long time and still not being able to use it. What if the policy holders never encounter serious accidents or illness? After paying a regular monthly premium and not needing it won’t let you get anything back from that investment.
• You need to balance the features you want and need, with the coverage you can afford for the long term. There is no point in taking out fully featured insurance which will cover you for every possible eventuality if you can only afford the premiums for three months until your budget is stretched to breaking point.
• Another reality about insurance is it is always underwritten. This means that each enrollee will have to go through a series of tests before the insurance provider decides whether you are qualified to have the policy or not. In case you are qualified, you could find yourself paying high premium based on the factors that surround you, like your job or the amount of exposure to certain risks.
• Long term income protection differs from policy to policy. It might be a little perplexing when you are looking for the right policy for you. What is being presented to you upon enrolment can be different when the benefits start to pay out.

Before making a decision for or against long term income protection, make an in-depth study about various policies available in the market. You can do that by consulting a financial adviser who will help you explore the different areas of this type of insurance and give you a good plan on what is the right policy for you.