Salary is more than just a sum of money. For the average Indian household, it is the engine on which the entire family’s finances run. From the aged parent’s medical bills to the child’s school fees, it is the breadwinner’s salary that takes care of it all. Hence, opting for a backup for this important source of income is crucial. If the breadwinner went through an unfortunate event, the family could experience an emotional as well as a financial setback.
Having a salary protection insurance plan can make it easier to deal with a setback. It can provide a fixed amount of money to the nominees of the policy if the life insured passes away due to an unforeseen event. Let’s explore more about what salary protection insurance is, how it works, its benefits, and more.
Understanding How Salary Protection Insurance Works
If you are the main breadwinner of your family, chances are that you are as concerned about their future as you are about the present. While your current income supports your family’s needs at the moment, you may worry about how they will manage if something were to happen to you.
- An income protection insurance plan is an ideal solution for such worries. As its name suggests, it is a type of life insurance wherein the beneficiaries receive financial support in the absence of the life insured. This financial support can act as a salary and provide a solid income source for the dependents of the deceased life insured.
- In return for this assurance, the policyholder must pay a premium. The premium is based on the age of the policyholder, their income, health status, and more. You can use a life insurance calculator to get an estimate of the premium and make better financial decisions.
- Note that salary protection insurance is a form of life insurance. So, its benefits will be available only if the life insured passes away. In most cases, there may be no maturity benefits.
Why You Should Opt for Salary Protection Insurance
Now that you know what salary protection insurance is, let’s look at some reasons why you should opt for it:
Helps Family Deal with the Financial Loss
The support from an income protection plan ensures your loved ones always have a financial plan to fall back on. The loss the family must deal with becomes a little lighter with this type of life insurance policy.
Takes Care of Multiple Financial Obligations
The nominees can use the payouts for any reason they deem fit. It can help them pay loan instalments, utility bills, children’s school fees, the family’s health insurance premiums, and more. Thus, one payout can play many roles, just like a salary.
Increasing Payouts Helps Fight Inflation
With some plans, the payout increases by a certain percentage each year, to help fight the negative effects of inflation on your family.
Provides Peace of Mind
When you know the future is taken care of, the present becomes easier to deal with. By opting for salary protection insurance, you can have better peace of mind, knowing that you have done your bit to secure your loved ones’ future.
Boosting Your Salary Protection Insurance Coverage
While your income protection plan can be a great help in itself, you can pair it with other coverage to boost overall protection. This is especially important when you consider the fact that there are many events in life where you may lose your job/income. For instance, being diagnosed with a critical illness can take away your ability to earn or be employed. To protect yourself against such an event, you can opt for critical illness insurance coverage with your whole life insurance policy. This coverage can provide a lump sum payout when the individual insured gets diagnosed with a life-threatening illness, ensuring they have the finances to deal with the coming challenges with dignity.
Salary protection insurance is a useful policy that can help a bereaved family take charge of their finances. As the main breadwinner, consider putting your funds into the right income protection insurance plan to ensure a financially safe and peaceful future for your family.
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