Income Protection Insurance: 3 Reasons Why

Income Protection Insurance
Protect Your Income First

Insurance, in general, is a grudge purchase. From all the insurances (life, car, home, credit and funeral), we believe that you should protect your income first. Income determines the quality of life you live. Consequently, income protection insurance is very important. In this article, we discuss income protection insurance. Then we highlight three more reasons why it’s vital to have it in place.

Income Protection Insurance

Income Protection Insurance protects your income in the event that you can’t work due to injury or illness. Who purchases it?

  • Business owners
  • self-employed people
  • professionals
  • commission earners
  • freelance workers
  • independent contractors
  • and, finally, those who have volatile incomes.

Income Protection is often confused with Health or Disability Insurance. Both of these types of insurance protect your physical health or mental ability to work. But only Income Protection Insurance will replace lost earnings from your job.

While out of work, this type of insurance will provide you with the cash flow necessary to cover your living expenses . Income protection insurance also covers rehabilitation and retraining expenses to help you get back on your feet and return to work as soon as possible.

If a person has an Income Protection Insurance policy, they will be eligible for benefits in as little as 7 days after becoming sick or disabled.  Benefits are payable from the first day of not working.

3 Reasons Why You Need Income Protection Insurance (IPI)

Reason 1:

IPI is more affordable than lump sum insurance policies

We have tested this out between multiple insurance providers and know it as a fact.  Due to the payout distributed over a long period of time (5  to 20 years, or whole of life), the impact on the insurance company’s reserves is less severe. as opposed to a large lump sum payout.  For this reason, Income Protection Policies have a lower premium, with a higher cumulative payout.

Reason 2:

IPI creates certainty in monthly income which allows for better financial planning.

Lumpsum insurance payouts are needed to settle immediate costs.  However, to generate a decent income from it , requires the lumpsum to be invested in volatile financial markets that provide no guarantees. Income Protection Insurance, however, provides that much needed guarantee, especially when you can not work any longer.

Reason 3:

IPI is a flexible and powerful financial planning tool in the hands of a competent financial adviser.

Assume that you are divorced and paying towards maintenance of your minor children.  When you die, your divorced spouse can claim the present value of the maintenance order from your deceased estate. And use it as they wish.  However, an Income Protection can be designed to pay the monthly maintenance order to any beneficiary guardian. Money goes to someone you trust will take care of your kids. It can also pay to a testamentary trust.      

Income protection is a precautionary type of insurance. You may not need it until you’ve had an accident or have a medical emergency. But when you do, it can provide much needed financial relief.

Bidvest Life is an Income Protection Specialist, and a partner of Virtual Adviser. Get a quote today!

How to find out if you have the right cover in place

It can be hard to know if you have the right insurance cover in place for your income. There are different types of cover that can be provided and from different insurance companies. Firstly, it is important to find out what type of insurance cover is needed. Then how much cover, and finally the cost.

You will only know this via a quote with an adviser.

Set up a consultation with an expert at Virtual Adviser.  We will present the best solution for you. We are independent and partner up with the most relevant insurer.

The importance of reviewing your Income Protection

Already have Income Protection? Is there sufficient cover? You can mitigate the risk of income loss by reviewing your Income Protection Insurance with our consultants. This is a versatile plan that can cover you for sickness, accident, or death. Therefore, it will pay you a monthly sum based on your salary while you are taking time off work. 

However, the devil is in the details. At Virtual Adviser, we are experts and have a track record of providing excellent insurance advice. Consequently, our clients are leading business people and illustrious professionals in South Africa.


There are a few different options to choose from when deciding the best way to protect your income. You should analyze your situation with a Certified Financial Planner, then decide which option is the best fit for you. Again, it’s very important to protect your income because it can affect everything including your lifestyle and future goals.

Contact us today.