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Insurance for Income Protection


Few things in life are truly certain, so we live each day with an amount of risk. This risk needn’t cause panic or distress, but it can help us prepare. Risk can affect income, property, possessions and health. Many people can endure some hardships with resources they already have, but mitigating financial risks with disability income insurance, life insurance and more can provide valuable assurance for you and your loved ones.

What is the role of insurance in financial planning?

Insurance helps us prepare for the unexpected. If you pay a monthly premium for health insurance, for example, a big health crisis will be much less costly because the insurance company has agreed to pay a portion of your medical expenses. When you pay for any type of insurance policy, you’re essentially paying for preparedness and peace of mind.

Insurance plans are a key part of any financial strategy. Insurance lessens risk by transferring some of the responsibility of the risk to an outside entity — the insurance company. Every well-rounded financial plan typically includes insurance policies. We especially recommend exploring your options for income protection insurance. This type of insurance is helpful in replacing or supplementing your income if you sustain a serious injury or become ill and are unable to work.

Types of Income Protection Insurance

Income protection insurance comes in many forms, and different types may be more helpful depending on your personal situation.

Disability Income Insurance

What is disability income insurance?

Disability income insurance is intended to provide policyholders with a percentage of their regular income while they are unable to work due to illness or injury. It is a type of insurance for income protection.

What is a disability income policy?

When a person signs up for a disability income insurance policy, they will pay a monthly premium in order to have access to the insurance benefits. The disability income insurance benefit is typically between 45% and 65% of the person’s normal income, paid monthly. This benefit helps support the policyholder’s lifestyle and living expenses while they are unable to earn their income at work.

Does everyone need disability income insurance? Who needs it?

Unless you have enough savings to support yourself and your dependent family members for several months while you’re unable to work, signing up for a disability income insurance policy is a good idea. You simply never know when illness or injury could occur, and income disability insurance could protect you from financial disaster.

According to research, over 25% of American workers experience a long-term disability (longer than three months) at some point in their careers.

What does disability income insurance cover?

Coverage details vary depending on each individual policy, but disability income insurance typically covers partial and total disability. Some insurers may also cover things like rehabilitation or retraining costs. Our team of Des Moines financial planners and advisors are trained to identify the disability income insurance policy that will best fit your unique needs.

Life Insurance and Financial Planning

What role does life insurance play in your financial planning?

Just like disability income insurance protects you and your family in the event of serious illness or injury, life insurance offers financial protection in the event of terminal illness or death.

Does life insurance contain income protection?

Life insurance and disability income insurance are two different types of insurance. A life insurance policy is not designed to provide beneficiaries with monthly supplemental income, like insurance for income protection. Instead, life insurance beneficiaries receive a lump sum according to the terms of the policy.

What is the difference between life insurance and an income protection policy?

Life insurance provides a lump sum of money to beneficiaries in the event of the policyholder’s death. Disability income insurance policies may contain death benefits, but they are mainly intended to insure a person’s income, not their life. In some situations, it may be appropriate to have both of these types of insurance. A financial professional can help you understand coverage details and decide which insurance plans will work best for you.

At what point in life should someone consider getting life insurance?

As a person ages, life insurance becomes more important. However, young people can also benefit from holding a life insurance policy. If you have a spouse, children or anyone who may depend on your income or whom you financially support, you may want to consider life insurance. If you’re single, a life insurance policy could help your family pay for funeral expenses. If you have more questions about life insurance, reach out to one of our Des Moines financial advisors.

Long Term Care Insurance

What is long term care insurance?

Long term care insurance can help individuals pay for care that isn’t covered by regular health insurance. These policies often cover services regardless of where they occur. A long term care policy could reimburse policyholders for care given in an assisted living facility, a nursing home or even in their own home. Coverage usually includes services like help with bathing, dressing and assistance with day-to-day tasks.

Why is long term care insurance an important part of a financial plan?

Many people sign up for long term care insurance when they’re in their 50s or 60s. Long term care can be incredibly expensive, and insurance can mitigate some of those costs. Additionally, it’s important to sign up for policies like this before it’s too late. After a person begins requiring long term care, they can no longer sign up for this type of insurance.

How a Financial Advisor Can Guide You Through Your Insurance Coverage Needs

There are many types of insurance available, and choosing the right policies for you can be overwhelming. Meet with our financial planners in Des Moines to discuss your insurance coverage needs. Our financial advisors will spend time discussing your unique situation and goals in order to formulate a custom insurance strategy that fits your family and your lifestyle.

The Financial Planners at Compass Financial Are Here For You

Compass Financial team members can offer advice about finding the right plans to protect your future. Connect with us and make an appointment today to discuss the balance and benefits of disability income insurance, long term care insurance, life insurance and financial planning.