The global economy still isn't back on its own feet as central banks are continuing to prop up the economy by printing more money. It seems like for the past few years all you've heard on the financial news is how the economy could slip into another recession. Based on historical cycles, recessions come around every 5-7 years on average. We're currently about 4.5 years removed from the "Great Recession" that dragged down the global economy and massive layoffs on a global scale. There's still plenty of people around the world that haven't found meaningful work since the last recession. If the economy stumbles and heads into another recession, will you be prepared?
We've all heard about the importance of health insurance, life insurance, auto insurance, and homeowner's insurance, but what can you do to protect yourself from job loss? Most governments provide some form of unemployment insurance, but there is a maximum benefits payout. Typically you will receive half of your previous pay up to a specified limit. That cap could easily be below half of your actual pay which can put a big strain on your finances. Seeing as how the average savings rate in the United States is somewhere between 3-4%, not many people can afford to have a 50% or more cut in their pay.
Of course another way your income can be at risk is due to a sickness or injury that forces you to miss work. Disability insurance will kick in but that won't typically cover your full income either. You don't want to have your focus taken away from the important task of getting back to full health. You can always find another job, but you can't get another body.
One way to help combat the difficult times of going through a job loss is income protection insurance. It's another way to insure against a job loss or sickness in order to keep your household running smoothly. Income protection insurance allows you to concentrate on finding another job or having your body recover without stressing about how you're going to pay the next water bill or electricity bill.
Combining unemployment insurance or disability insurance with income protection insurance can let you sleep well at night knowing that you can cover you bills. Income protection from AAMI can provide up to 75% of your monthly income for a low premium. Income protection insurance could be another tool in your arsenal to combat against the challenges that life throws your way.