Income Protection
If the worst happens, income protection insurance can provide expats financial security and peace of mind. Read our guide to learn more about the importance of income protection while working abroad.
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Income Protection for Expats in Asia
Living and working abroad comes with its own set of challenges. A loss of income should not be one of them.
Income protection is a key product that can help provide financial stability, no matter what surprises life throws your way.
This guide provides a comprehensive look at the importance of income protection while working abroad.
What is income protection insurance?
Income protection is a type of insurance designed to provide you with a regular income if you cannot work due to illness, injury or disability.
It acts as a financial safety net, ensuring you can maintain your standard of living, cover your expenses, and protect your savings even when you're not earning your usual salary.
This type of cover is particularly important for those who rely on their income to meet financial commitments and support themselves and their families.
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Use the links below to quickly find information about expat financial advice
- Income Protection for Expats in Asia
- What is income protection insurance?
- How does income protection insurance work?
- What does income protection insurance cover?
- How much of your income does income protection cover?
- How much does income protection insurance cost?
- Income Protection vs critical illness insurance
- Income protection vs life insurance
- Does income protection insurance cover redundancy?
- Choosing the right income protection policy
- Why income protection is vital for expats in Asia
- How Holborn Assets can help
- FAQs
How does income protection insurance work?
When you take out an income protection policy, you agree to pay regular premiums to an insurer. In exchange, the insurer commits to paying you a predetermined portion of your income if you're incapacitated and unable to work.
The coverage typically kicks in after a specific time period, known as the deferred period. This can last until you can return to work, retire, or the policy term ends.
What does income protection insurance cover?
Income protection insurance covers a broad spectrum of scenarios where a loss of income arises in the event of illness.
It encompasses a broad range of conditions ranging from short-term injuries to long-term illnesses.
However, it's crucial to note that policies vary, and it's essential to understand the specifics of what your chosen insurance covers.
Income protection insurance policies do not always cover every type of illness. It's essential to know what your chosen insurance covers as they may not cover pre-existing medical conditions.
Insurance companies will look at your family medical history. Whether they cover certain conditions will be at the insurer's discretion.
How much of your income does income protection cover?
The percentage of your monthly salary you receive will depend on your level of premium payments and the type of income protection policy you take out. It is important to check this with the insurance provider to know how much you can expect.
Typically, income protection policies cover up to 75% of your pre-tax salary. This coverage provides a substantial portion of your income, enabling you to keep up with your living costs, such as mortgage payments, maintain your lifestyle and protect your savings.
The period of time that income protection insurance pays out can vary significantly, from a few years to up until retirement age. It all depends on the policy's terms.
This flexibility allows you to choose coverage that aligns with your career plans and financial goals.
How much does income protection insurance cost?
The cost of income protection while working abroad can vary. It is often influenced by factors such as:
- Age
- Health
- Occupation
- The level of cover you choose
- Pre-existing conditions
Another factor that can affect the cost is whether you are paying standard or guaranteed premiums.
Income Protection vs critical illness insurance
While the two are often confused, it's important to understand the difference between income protection and critical illness insurance.
Income protection provides a regular income during periods of illness or injury. Meanwhile, critical illness insurance provides a lump sum payment if you're diagnosed with a specific severe condition.
Each serves distinct roles in a well-rounded financial protection strategy.
Income protection vs life insurance
Income protection is very different to a life insurance policy.
Life insurance is all about looking after your loved ones when you're no longer around. It provides the financial support needed to cover the cost of living and other expenses for your beneficiaries.
Does income protection insurance cover redundancy?
A common question for those wanting to know what income protection insurance covers relates to redundancy coverage.
Typically, income protection does not cover redundancy, as its primary focus is on illness and injury.
However, specialised policies or add-ons may offer protection against job loss. This highlights the importance of seeking professional advice before taking out a policy.
Choosing the right income protection policy
Selecting the appropriate income protection policy involves comprehensively evaluating your needs, lifestyle, and financial objectives.
Some of the factors to consider include:
- The coverage amount
- Premium costs
- Waiting periods
- The policy's terms and conditions
Why income protection is vital for expats in Asia
Expats in Asia face challenges with healthcare that differ from their home country. Language barriers and unfamiliar healthcare practices complicate their experience.
Income protection insurance provides financial stability during times of illness or injury, removing worries about affording quality care or paying bills without regular income.
Another reason to consider income protection while working in Asia is the risks associated with loss of earnings.
Living abroad can introduce uncertainty to job security. And a loss of wages isn't limited to personal health crises.
An economic downturn, restructuring, or visa policy changes can jeopardise employment overnight.
Income protection acts as a financial lifeline in unpredictable environments. It can help ensure that you won't immediately face financial hardship if you lose your job due to circumstances beyond your control.
This buffer allows you to focus on finding new employment or exploring other options without the stress of covering broader living costs.
How Holborn Assets can help
Managing finances in a foreign country is about more than just converting currencies.
It involves planning for the future in a potentially less secure environment than back home. It can help cover medical bills, rent, school fees and daily expenses.
For expats living in Asia, having income protection while they are working overseas. It can help provide financial security for you and your family.
To better understand your options and the type of cover that best suits your needs, speak to an expert.
Holborn Asia offers independent, expert financial advice and wealth management solutions. We work with leading insurance brokers to ensure you get the coverage you need for peace of mind.
We are part of the wider Holborn Assets Group, a leading, award-winning financial advisory company with over $2 billion in assets under management (AUM).
Book a free, no-obligation meeting today to learn how we can help you.
Frequently Asked Questions
Income protection insurance typically covers loss of income due to health reasons and does not include redundancy. However, some policies offer additional coverage options, so it's important to discuss your needs with a Holborn Assets adviser.
