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What is Income Protection, and do I Need it?

No matter how well we plan for our futures, there is always a chance that something unforeseen can happen to us, jeopardizing everything we have worked hard for along the way.

This is why personal financial planning is important as it prepares us for the unexpected. Life is unpredictable, but that doesn’t mean we cannot put measures in place to protect our finances when things take an unexpected turn.

That’s where insurance comes in. It’s there to provide you with certainty and peace of mind, knowing that you are protected when the unthinkable happens.

In this article, we discuss income protection insurance, what it is, and why you should have it.

What is Income Protection?

Nobody is immune to loss of income. Anyone can be retrenched, fall ill, or suffer serious injury which renders them incapable of fulfilling their employment duties. This strips away your ability to earn an income and ultimately puts you at risk of additional loss such as repossession of assets.

Income protection is a type of long-term insurance which replaces or, at the very least, supplements your income should you suddenly be unable to work, whether it be temporarily or permanently.

what is income protection

What Does Income Protection Cover?


Income protection will cover lost income after retrenchment. Losing your job suddenly can be extremely stressful and traumatic and not being prepared for it will add unnecessary stress to the equation. Most policies will provide cover for a period of 6 months, while others may extend it to 12 months. The purpose of this income protection is to make sure you have a stable stream of income until you find employment.

Illness or Disability

This is different to disability cover. It is not meant to pay for your disease or medical bills related to your disability. Instead, it serves to provide you with an income for as long as your conditions exists, or if it is permanent, until retirement.

Why You Need Income Protection

As we mentioned previously, nothing is guaranteed, and anything can happen to you and your income. This is why every person should have income protection, regardless of how young or healthy they are.

What’s important to remember is that our responsibilities don’t disappear when we are no longer able to earn an income. Our bills still need to be paid and our debts are still debts until they are settled in full.

Income protection is especially important for people who are the sole breadwinners in their household. If you lose the only stream of income you have, your family will have nobody to depend on.

How Much Does Income Protection Cost?

As with all insurance policies, your income protection premium will depend on risk factors such as:

  • Your age
  • Your gender
  • The industry in which you work
  • Whether you smoke and/or drink alcohol regularly
  • Your job
  • Your family history
  • Your overall health
  • The income amount you want to cover
  • The types of benefits you want covered (retrenchment, disease, disability, or all)
  • The type of illness or disability suffered
  • How long you want the benefits to be paid for

Olemera Financial Services – Financial Planners in Johannesburg

Understanding the different policies available to you and how their premiums work can be challenging for the average person. That’s why our financial planners in Johannesburg are here.

We can assist you with figuring out exactly what type of income protection you need, and which is the best policy for you.

Our financial planning services are available to anyone in South Africa. Please contact us for more information.

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