What Would You Do If You Lost Your Income Tomorrow?
Nobody wants to think about waking up tomorrow without a steady stream of income or even any income at all. Thanks to today’s trying economic times, it is an unfortunate reality that many people have had to face. It is always important to have a detailed plan in place in the event that just such a catastrophe should occur. Just because you no longer have a job doesn’t mean that your utility bills will suddenly stop, or that you won’t have to help provide for your family. Luckily, there are a few key things that you can do to help get you back on your feed and to ride out the storm as efficiently as possible. One of those key factors comes by way of income protection insurance.
Emergency Funds
You should always be putting money away from each paycheck that you receive to help prepare for job loss. Thanks to a severely troubled worldwide economy, no job is truly as secure as one would hope that it is. Entire industries have failed overnight and even if your company stays around, your position within that company might not be. Put money from each check that you receive into a savings account so that you can start earning interest on it right away. Always make sure that the account has enough money to cover utilities and other expenses for at least a few months so that you can look for a new job if need be. Don’t ever be caught without emergency funds, as bills won’t stop coming to your house just because your income has suddenly disappeared.
Income Protection Insurance
Another great way to help prepare yourself for the unfortunate loss of a job or income stream is by way of income protection insurance. The duration of these types of policies typically go either until you return to work or until the policy itself expires. The expiration date will be listed in the policy’s terms and conditions.
One of the great things about income protection insurance is that there are no specific requirements for actually collecting. You don’t necessarily have to lose your job to collect, for example. If you were injured on the job or are unable to work for any other reason, income protection insurance will kick in.
When you first sign up for an income protection insurance policy, you will be asked to provide proof of your income level for that particular period. You will then be insured for that specific amount, so it is always important to be as accurate as possible. If you are unable to work due to illness, injury or any other unfortunate set of circumstances, the insurance policy can cover up to 75% of your proven income. In a wide variety of cases, income protection insurance policies are also considered to be deductible expenses on your yearly income taxes.
If you don’t start planning for lost income today, even though it may seem unlikely, you may find yourself without a necessary safety net tomorrow.
Helen Akin is an emergency preparation expert. She loves to share her tips for planning for the worst on homeowner blogs.
Category: Family Finances
