Income replacement insurance—also known as income protection or disability insurance—provides financial support by replacing a portion of your income if you're unable to work due to illness or injury. It’s a vital safety net for anyone who relies on their paycheck to cover living expenses.

💼 What Income Replacement Insurance Covers

This policy is designed to maintain your financial stability when you can’t earn due to health-related setbacks. It typically includes:

• Monthly benefit payments: Usually 50–70% of your gross income, paid directly to you.

• Coverage for illness or injury: Whether short-term (e.g., surgery recovery) or long-term (e.g., chronic illness).

• Flexible benefit periods: Can range from a few months to several years, or until retirement age.

• Waiting period (elimination period): A delay (often 30–90 days) before benefits begin after you’re unable to work.

It’s not the same as health insurance—it doesn’t pay for medical care, but rather helps you cover mortgage, rent, utilities, groceries, and other daily expenses.

🧠 Real-Life Example

Scenario: A self-employed graphic designer suffers a serious back injury and can’t work for 8 months.

• Without income replacement insurance: They lose their income and struggle to pay rent and bills.

• With coverage: Their policy pays 60% of their pre-injury income monthly, allowing them to maintain their lifestyle and focus on recovery.

This kind of protection is especially critical for:

• Sole breadwinners

• Dual-income families

• Self-employed professionals

• Employees without employer-provided disability benefits

💰 Cost Factors

Premiums vary based on:

• Age and health

• Occupation risk level

• Income amount and coverage percentage

• Benefit duration and waiting period

Younger, healthier individuals in low-risk jobs typically pay less. Policies can cost $30 to $100+ per month, depending on coverage.

🛡️ Types of Coverage

⚖️ Why It Matters

According to recent data, 4 in 10 families would face financial hardship within six months if the primary earner died, and 1 in 5 within one month. Income replacement insurance helps you:

• Avoid draining savings

• Maintain your lifestyle

• Protect your family’s financial futur

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