Case Study 1
Megan is a young adult who does not have any responsibilities to tie her down. She earns $40,000 annually but she has never kept any money aside for savings since she believed that bad things seldom happen to young people and life was meant to enjoy.
However, she purchased an income protection insurance policy in case she cannot work temporarily. Due to money restrictions, she purchased the cheapest policy available online which offer benefits such as monthly compensation payments of 50% of her income. This policy had certain restrictions such as a long waiting period of 4 months and a short benefit period of 2 months.
Megan had a car accident during Christmas and she injured her neck. Due to this accident, she could not go to work for 3 months. Since Megan had picked up an income protection plan she received financial help from the insurance company however, due to the long waiting period and lack of paid leaves, Megan had to ask her relatives for money to make ends meet.
After getting the first compensation payment, she realized that 50% compensation wasn’t enough and that she should have opted for a policy with a higher compensation payment amount.
If Megan had selected an income protection plan with a shorter waiting period then she would have got her first compensation payment sooner. If Megan had calculated the number of paid leaves she had while deciding how much time to wait before getting the first compensation amount then she could have chosen an ideal waiting period and prevented money problems.
If Megan had decided to spend a few more dollars every month then she could have insured up to 75% of her income. Since Megan received retirement benefits and other perks from her employer as part of her package, she would have been eligible to insure her income for an additional 8% if she had purchased a better policy.
After Megan recovered from the injuries, she realized the importance of buying a good policy. She realized that good income protection plans are investments and they can prevent people from suffering later on when they cannot work due to serious health problems. Megan decided to purchase a good plan right away and she picked up a good plan that not only offered 70% income protection insurance but also additional benefits that were not limited to a death benefit.
Income protection insurance plans are meant to help people in Australia, live without worrying about money problems, recover from illnesses or injuries without taking stress about money issues and live life as normally as possible while recovering. Good insurance plans make all of this possible and ensure that people get maximum benefits for the lowest cost.