April 27


Income Protection Insurance

By Edward Givens

April 27, 2020

Supplemental plans are not health insurance plans, they are additional plans with there own premium that can be used to provide additional protection beyond a base health insurance plan. The fact that these plans can pay a benefit to the insured in addition to any other existing coverage, may help to supplement any potential lost income due to illness or injury. Some states require you to purchase a health plan that has minimum essential coverage in order to buy a hospital confinement, metal gap, fixed indemnity, or other type of supplemental policy. 

Expecting the unexpected is one thing, paying for it, is another. Supplemental insurance can pay you a direct cash benefit to help with expenses. According to a Jan 2020 article in Market Watch Americans are living paycheck to paycheck. Depending on the survey, that figure runs from 50% of workers making under $50,000 (according to Nielsen data) to 74% of all employees (per recent reports from both the American Payroll Association and the National Endowment for Financial Education.) And almost 30% of  adults have no emergency savings at all, according to Bankrate’s latest Financial Security Index. (A shocking number of Americans are living paycheck to paycheck Published: Jan. 11, 2020 at 3:11 p.m. ET)

With numbers like this it's not be surprising that many people wonder; How will we cover
our day-to-day expenses if one of us is sick or injured? or Can we pay our health insurance deductible without using our savings or going into debt? or How long can we afford for one of us to be out of work?

According to a Nov 2019 CNBC article for 137 million Americans, the scariest bills to open are medical bills. That’s the number of adults who have faced medical financial hardship in 2018, research shows. In fact, medical debt is the top reason that people, regardless of age, would consider cashing in their 401(k)s or other retirement savings, TD Ameritrade found. Separate research published in 2019 found that 66.5% of all personal bankruptcies are tied to medical issues. (137 million Americans are struggling with medical debt. Here’s what to know if you need some relief PUBLISHED SUN, NOV 10 20199:45 AM ESTUPDATED TUE, NOV 12 201910:53 AM EST)

If you're someone who has had thoughts like these then a supplemental plan may be a good fit for you. There are supplemental plans that can provide you with tax free income for accidents or illnesses that may occur to you or your family. This money is paid to you, you can use it to pay your rent, auto loan, deductible, or any expense you feel is necessary. Plans like these can help you sleep better at night knowing you have access to an additional pool of money during a challenging life event. 

These plans are not for everyone, but for many people they can provide a benefit that would not be available otherwise.

If the following situation were to happen to you, what would be your plan?

Cindy Johnson, at age 42, was diagnosed with Stage III Breast Cancer.  Even though Cindy had been going for her annual mammograms and one had required additional review by a pathologist, this was her first diagnosis of internal  cancer.  As a result, a surgery was performed and she was treated with chemotherapy and radiation for the next 12 months.  After she was released from the hospital, Cindy was unable to work for the  12 months following her surgery and also while she received  her chemotherapy and radiation treatments.  Fortunately for Cindy, she has purchased an Income Protection plan to supplement her Bronze level health insurance.

Example: (Income protection plans depend upon income, premium, and age. Your results will depend on the plan you choose)

A Bronze level plan paid $50,150, leaving Cindy to pay $6,350 in medical expenses. Cindy’s monthly income protection benefit did not exceed 60% of her gross monthly income so  Cindy's income protection plan paid $30,000 over the 12 month period and waived her premium for 9 of the 12 months.

This amount covered the gap left by her Bronze level plan and gave Cindy $30,000 to help with her lost wages and other incidental expenses such as her mortgage and car payment.

Edward Givens

About the author

Working with me will allow you to have a healthcare plan that protects your health, your income, and your family. I'm a licensed health insurance adviser, entrepreneur, teacher, leader, and coach with 15 plus years of healthcare industry experience . I help small companies, professionals, individuals, and those eligible for medicare benefits design their healthcare plan to meet their needs and fit their budget. I'll be with you for the long haul. I'll assist you with education, selection, questions, and claims.

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