Most people generally don’t have any issues when it comes to insuring their assets and properties. Physical assets like real estate properties, cars, and personal belongings are insured with no hesitations. The idea is people will do whatever it takes to ensure that their possessions and all the money spent in acquiring them are protected. However, most people overlook their best asset — the ability to earn an income.
A lot of people don’t really buy into income protection for several reasons. Perhaps some of them have too many things going on and don’t have time to include it in their financial planning (which is a totally lame excuse), or maybe they don’t see the need for it because they believe they’re fit and healthy (which is also a lame excuse).
Given the global health crisis, we’re in right now, none of us can truly say we’re protected from an invisible yet very deadly enemy. We can do our best to comply with the given health protocols, eat healthily, and exercise regularly, but other factors could incapacitate us and keep us from working for quite some time.
Why is income protection important?
Two of the most common causes of inability to work are illnesses and injuries. If your health is negatively affected to the point that you cannot perform your work efficiently, chances are you will get replaced by the company to keep the workflow going.
Income protection is important in times like this. While no one wants to stop working due to an injury or disease, in most cases, this is the best course of action for a person to recover and recuperate well. You’re left with no choice at this point. This is where income protection comes in.
It helps to keep your quality of life going.
Once you get sick or injured and cannot report for work for at least a few months, income protection ensures that your quality of life can be sustained.
It gives you peace of mind.
Protecting your income gives you peace of mind that when something untoward or unexpected happens, you won’t be caught in a worse situation financially.
It helps pay your bills.
It will definitely suck if you’re paying for mortgage refinancing, car loans, credit cards, and utilities and find yourself suddenly without a job. Income protection makes sure you can still make those payments as you recover.
It helps you stay focused on your healing and recovery.
When an injury or sickness takes place, one of the things that add to a patient’s recovery is the burden to provide financially for his or her family. Income protection takes your mind off temporarily and allows you to focus all your energy and attention on your recovery and recuperation.
We are faced with a lot of uncertainties every day.
We don’t know what tomorrow brings. We may make plans, but life has its way of ruining those plans by throwing us a curveball. It’s better to be prepared for the worst than not be caught off guard.
How can you protect your income?
There are a few highly effective ways to protect your main source of income. But it would be better to consider the following as steps and not just options for income protection.
Build an emergency fund and savings
This one is pretty basic, but a lot of folks still fail to do this. There is a reason why most finance experts recommend building a healthy emergency fund. Its primary function is to save you financially from any sudden disruptions to your income stream. If you still don’t have an emergency fund, we highly recommend working on it now.
Consider getting income protection insurance
Income protection insurance isn’t like your typical life or health insurance. It gives you a certain percentage of your monthly income for the duration of your recovery. The amount you get can help take care of most of your living expenses which take off a huge load from your shoulders.
Add value to yourself as a professional
Another way to help build your financial shield is to invest in yourself and increase your value as a professional in your field. Become a subject matter expert or update your industry skills to make you a valuable asset to companies just in case you need to look for a job elsewhere. Even if you don’t lose your job or get sick, it is still a worthy pursuit for any professional worth his salt.
Look for other income streams
Lastly, hustle as much as you can while you’re still healthy. As you build your emergency funds, get additional coverage on your insurance policy, and increase your value as a worker, look for other ways to earn. At this point, every penny counts. You can get a side gig if your schedule permits. Or perhaps you can make short-term or long-term investments depending on your goals. Either way, there are a lot of great opportunities for people to have secondary income sources. All you need to do is find the right one for you.
Protecting your income means anticipating the worst thing that could happen and preparing for it, no matter how unlikely it seems. This is one of the most responsible things you can do for yourself and your loved ones.