Many Americans are in a dire financial situation – companies are laying off thousands of employees, jobless rates continue to climb, and those out of a job are faced with finding the means to support their families. Most pressingly, homeowners must continue to pay on their mortgage and avoid losing their home in foreclosure.

If you are currently working, count yourself lucky. Though the present can give us false confidence in our ability to meet financial obligations for the unforeseeable future, anything can happen. Even tomorrow you may be faced with the real possibility of job loss. What can you do now to help protect your income if that happens?
Income Protection Insurance

Income protection insurance has been in existence for a long time. In its most popular form, income replacement is called ‘disability’ insurance, which helps replace income for those who are injured and unable to work.

There are insurance companies that will sell unemployment income protection policies, however. You can choose a policy that will start replacing a portion of your income, usually about 1/2 or 2/3 of your normal monthly earnings, approximately one month after you become unemployed. Rates can be high for this insurance, but the money you receive while unemployed can save your home and support your family while you find other work.

Mortgage Protection

Many companies offer mortgage protection insurance. This type of insurance will continue to pay your mortgage or a portion of your mortgage should you become disabled and unable to work or become unemployed. Though most mortgage protection insurance policies pay your full mortgage upon your untimely death, there are policies available that will simply take over payments if you become financially unable to do so.
Savings

Of course, you should have an emergency savings account with at least three to six months of living expenses available. If you suddenly lose your job, you will need this savings account to continue paying your mortgage and supporting your family. If you do not have an emergency savings account, set one up today and begin contributing funds into it as soon as possible.
Annuity

Another form of income protection is an annuity. Annuities are a type of investment option, usually through insurance companies, where you pay a lump sum or a monthly amount into the annuity, and at an agreed time, the insurance company begins paying you a regular monthly income. The payments to you are based on the interest returns on your money and how long you wish to receive payments. If you have a lump sum of money that you can afford to put into an annuity, the returns can be greater than leaving the money in a small interest-bearing savings account.

Protecting your income due to unforeseen events should be a high priority for everyone. Start planning today to save or buy insurance or an annuity so that you will have income if you are out of work for any reason.

This article is intended for general information. Always seek sound financial and legal advice before making any financial decision.

There are various insurances to protect your income and you need to know what cover your employment would give you so that you can protect against any shortfall should the need arise. Below we explain what plans there are at what they do.

Mortgage Payment Protection insurance will pay your mortgage if you are made redundant, fall ill or are injured, for one year, sometimes two. Of the 11.7 million current mortgages just 2.3 million are protected by this insurance and seven out of ten of those cost more then 5 pounds per month per 100 pounds of cover and are sold by the lender – if bought independently than can be more competitively priced. A spokesman from mortgage brokers London & Country said, “This is often regarded as expensive cover and the take up is low.”

Payment Protection Insurance (PPI)

Payment Protection insurance is normally specific to a credit agreement, credit card or personal loan mostly with benefits going straight to who is providing the service and therefore, payments should not have any affect on any social security benefits. You are protected if you are made redundant, are injured or too ill to work. This cover usually costs approximately 18 pounds per month for every 100 pounds of monthly cover. For a monthly repayment of 300 pounds the cost of the premium is 54 pounds a month.

If you feel you need this security then it is worth having but you do not have to take it from the lender as it will be expensive, even adding thousands onto your loan. Companies have been mis-selling PPI but Alliance and Leicester have been caught out and fined 7 million for doing it. If you want PPI an independent provider will be more competitive; try britishinsurance.com or paymentcare.co.uk

Short Term Income Protection

Short Term Income Protection is different to the above two. It is paid directly to you and is linked to your income. This means it covers everything, from major outgoings (mortgage) to the gas bill but, it could affect any social security entitlement. Again, it pays out if you are made redundant, you are injured or ill and unable to work and the cover you get is calculated on 75 per cent of your net income or 40 – 60 per cent of your gross income. Some providers cap their monthly pay out at 1,000 pounds but others will pay up to 2,500 per month.

Unemployment Cover

Unemployment cover will pay between 40 and 60 per cent of a gross income in the case of redundancy and can be available as a free-standing policy. Social security payments can be affected again as it would be paid directly to the recipient. If your employer offers good benefits if you are injured or sick it may be worth having this stand-alone policy but it can cost more than a policy that covers for illness and injury too.

Full Income Protection

Full Income Protection can give you a policy that will include unemployment and the cover for injury or sickness is also more comprehensive and generally pays out for longer too. Nevertheless, the unemployment cover is as restricted as it is with any other policy and will only pay out for a maximum of 2 years.

Fixed Income portfolio can suffer sudden loss due to by inflation or currency depreciation. If you have large investment in this asset class, a portion of the interest earned can be invested in out-of-the-money gold calls. This is a cheap way to protect your asset.

How to protect diversified portfolio?

You can diversify by owning bonds as well as stock; owning small, midsized and large companies; and by owning different funds, some of which some are value oriented, while others are growth oriented. More sophisticated approach will be to use Commodity fund and Hedge funds. Commodity index fund is a good alternative asset class to reduce over all risk of a diversified portfolio.

You can follow any one of the following option to protect down slide of your investment
a. Purchasing out-of-the-money puts and calls, for very small sums of money, and be content when they expire worthless.
b. You can also buy future but it involves more money.
c. If you have a home loan with a variable-rate mortgage loan, that can be protected by buying out-of-the-money bond puts.
d. A retired couple with a large municipal bond portfolio might consider a combination of owning some precious metal warehouse receipts and at the same time using a small portion of their interest stream to purchase out-of-the-money gold calls.
e. You can sell US dollar index or buy Euro. You can involve in Forex trading in small amount.
f. Considering strong bull market, you can go long term long on commodity and roll over your contract every month end.

How to protect bond portfolio against dip in currency
If dollar price decreases, price of municipal bond decreases but commodity price will increases.

In this case exercise option to buy commodity and sell USD.

How to hedge Large cap stock against fall of USD.

Any increase in US dollar, reduces stock price and commodity price.
The options purchased should behave in the opposite manner of the basic portfolio and should not be purchased for speculative gain through trend watching, market timing, or chart pattern recognition.

While classic diversification attempts to reduce the overall volatility of the portfolio, real diversification provides customized insurance against a drop in value of the primary assets . The asset class used as a hedge must have an inverse relationship or correlation with the asset being hedged. Simply put, as the price of one goes up, the price of the other should go down.
Your investment philosophy is to own a small part of the company for at least 20 years. This ownership mentality will really give you money in the long run.

In the high bull market do partial profit book regularly. If market sentiment is strong bull, use Future and options strategies.
If market sentiment is strong bear buy put option. Use 5% of your money in Future and Options trading.
You should use Future and Option for portfolio management of your stock portfolio. Option trading basically used to hedge your asset and also make some speculative gain.

In strong bear market, your blue chip companies can generate good income if you use covered call option regularly. It’s not difficult to get 40% p.a. ROI by writing Covered Call Option.

In short, the stock market is a voting machine and much of the time it is voting based on investors’ fear or greed, not on their rational assessments of value. Stock prices can swing widely in the short-term but they eventually converge to their intrinsic value over the long-term.

Missing work during and after pregnancy has become a common occurrence. According to a 2002 study, 29% of short term disabilities (180 days or less) and 12% of long-term disabilities are due to pregnancy. Maternity disability can turn what is otherwise a happy occasion into a financially harrowing experience when the mother is left unable to work for months before and/or after delivery. Disability Income insurance can be the answer to the unknown risk to a household’s cash flow due to pregnancy.

Many larger companies offer paid maternity leave to employees whereby the employee is granted full pay for a period of time (generally 3 months) while out of work with the newborn. Any complications that cause the employee to miss work before delivery or beyond the maternity leave period after delivery result in a loss of income for days or even months.

Individual short term disability insurance can provide up to 70% of regular income when you’re not able to work due to illness or injury for 3-6 months. Long-term disability insurance takes over after the short-term benefits period has passed and can provide income protection for up to five years or longer.

Mothers-to-be often rely on the group disability insurance offered by their employer. Group disability usually covers up to 60% of regular income. However, all benefits received from such a policy are taxed as regular income, lowering take home dollars to roughly 42% of regular income. Group policies are also commonly riddled with exceptions and limitations that further reduce or eliminate benefits altogether.

Women with a family history of troubled pregnancies may also consider catastrophic disability insurance (CDI). CDI is different in that it is intended to cover the costs of extended at-home care instead of income loss. For instance, if a pregnancy requires the mother-to-be to literally stay in bed for months, CDI can cover the cost of a nurse to help with daily living needs. Such care is not covered by any other type of insurance and will be very expensive. CDI will cover up to specified daily amount ($120, for instance) and can be purchased with an option to increase benefits annually based on inflation.

Mothers-to-be with group disability insurance can very affordably plug the holes in their policy with a supplemental disability insurance policy. Supplemental coverage can extend income protection to 100% of pre-disability cash flow and benefits paid from the supplemental policy are not taxed as income.

The key to protecting a future mother’s income during pregnancy is to get disability insurance, be it individual or supplemental, before becoming pregnant. Once pregnant, the eligibility for additional disability insurance evaporates.

Future moms have several options to protect their income from a long-term or short-term pregnancy disability. Without this coverage, families take the risk of losing a good portion of their income for months, if not longer. Whether you participate in a group plan at work or not, maternity disability can be planned for in an affordable manner to help ensure a truly safe pregnancy where your family’s quality of life remains unaffected.

Please visit us at Disability Insurance Update with any questions or to find further information regarding the protection of your income during and after pregnancy.

Sole bread winner of the family? Have you contemplated over securing your family member’s future? You must be prepared for an inevitable occurrence. Have you ever thought of what would happen in case you were to lose your job, or may get bed ridden due to accident, sickness etc? Do you have enough funds to keep your monthly expenses going?

If not, don’t you think you must do some thing about it? It is not easy to face the situation, instead of repenting over what you have missed out, it’s better to think now. You must have a policy in place so that you don’t brood over later. What can you do to avert such situations? Simple, understand what does income protection insurance means and then apply for it. Insurance protection offers protection to your income when you are out of employment due to redundancy, accident, sickness or unemployment.

Get substantial monthly income in case of an eventuality. ASU Or Accident, sickness and unemployment cover is included in this. Your policy will safe guard your income in times of accident, sickness or unemployment. This lets you fulfil your family’s needs despite of being bed ridden. Well, that offers so much solace isn’t it? Why brood over it for long when you can do some thing right away. Get yourself a proper policy and bring your family under a protective cover.

Being able to keep up with your mortgage payments means a lot to you. You save your home and save yourself from any creditor’s embarrassment too. No more of those harassing calls, your mortgage payments will be taken care of. With timely repayments you will not have to face any back credit score problem or eviction from home.

Covers up all your payments – make use of a policy cover:

Medical expenses
Hospitalisation charges such as surgery and post operative care
House hold expenses
Credit card bills
Mortgage payments – EMI

Isn’t it a breather in times of financial despair. You don’t have to worry about meeting your basic financial expenses, be it your grocery bills or other house hold bills. Income Protection Cover will give you a substantial monthly income in the event that you are unable to work due to illness or injury, especially important if this happens long before retirement. Health insurance cover will provide for you and your family over a period when you cannot work and have no other source of income.