Income protection will be there for you to turn to if you should suffer accident, illness or become a victim of unemployment and lose your income as a result. Without it and you might have to struggle simply to find the funds to be able to pay your rent, your gas and electric bills, and your food bills. With protection you will have an income which will provide peace of mind that will allow you to concentrate on looking around for work and securing a job or making a recovery and getting back to your work.
What does income cover do?
Your income payment protection insurance policy will begin to provide you with a replacement income once you had passed a certain amount of days of unemployment or incapacity, which can be anywhere between 30 – 90 days after the event. This amount of time will differ depending on the provider so you will need to check out the terms of the policy to be sure of when you could claim. It will then continue for a certain amount of time before it ceases which again will differ with providers.
When can a claim be made on the policy?
Your provider might allow you make your claim once you have been unemployed or incapacitated for just 30 days. However there are some providers that might state you have to wait for up to 90 days before you can make your claim. Some providers could also offer to date back your benefit to the first day that you become a victim of unemployment or incapacity so it is essential that you check to ensure you know the terms before taking your cover.
How much will my policy pay?
You will be able to choose how much of your monthly income you wanted to insure, typically up to £1,500 or half of the gross monthly salary you bring home. The provider will need to agree to your chosen amount and once the provider had pre-agreed to your chosen amount this is how much they will pay you back each month for the term of the income protection policy if needed.
How long will the cover continue?
Your policy could continue paying for up to 12 months and then benefits will cease. However there are some providers that might give you benefit over 24 months before your income protection stops. You will need to read the terms that were offered by your chosen provider before you took on the cover.
Tailor the policy to suit your needs
If you want you can choose what events you want protection against. You could take out cover just for unemployment alone or you could choose just to insure against the possibility that you might become a victim of incapacity.
Of course a policy can be taken to cover both incapacity and unemployment in one so you will have protection if you were to suffer from either of these events.
Other payment protection insurance you could consider
If you want to be able to service any essential outgoings each month then you might want to take income payment protection into account. With the money from this policy you could choose what to spend your income on and when.
You might choose to take loan payment protection or mortgage payment protection insurance if you have loan or home loan demands to keep on top of each month. This policy supplied money that will go a long way to you being able to keep up with your loan repayments and keep out of court.
What alternatives are there to payment protection?
If you were eligible then you could claim an income from the State if you should lose your own to unemployment or incapacity. However any money from the State might not match your own income and you could still be unable to find money for all your essential outgoings. You could also have to wait for many weeks before your State benefit began and this could mean you are already in arrears with your repayments and have the lender sending letters.
Checking for eligibility
There are always certain exclusions to be found in a policy and you have to check these against your lifestyle before taking on a policy. An ethical provider will provide you with the information you need to determine suitability so that a check can be made before paying for cover.
For instance you will need to reside in the UK, the Isle of Man or the Channel Isles in order to be eligible to make a claim on the insurance. And typically you will also have to be working in a full time job at the time of taking out your policy and you will have to have been working full time for 6 months at least before applying for cover.
Other exclusions you might come across include if you are self-employed. Check the terms of the cover on offer before taking it out as generally you will only be eligible to make a claim should you stop trading altogether.
How to get a great deal on your insurance
If you choose to go online and search and compare with specialist payment protection insurance (PPI) providers then you can be sure that you will get the cheapest quotes. You could save a great deal of money this way and you are able to choose what you want to take income protection against.
You could also compare the terms and check that you will be eligible to make a claim on the insurance before you buy the cover.
The main benefits summary
• The benefit from the policy will be there for you to spend as you wanted just as you did with your own income. You could spread it out over whatever repayments you had which could include such as your rent and family food bill
• You can choose what you want to take protection against. Cover could be taken out for unemployment and incapacity together or you could just choose to take protection against incapacity alone or redundancy alone whichever suited your needs better.
• The benefit from your income protection will be paid each month as tax free payments
• Peace of mind that with your income payment protection insurance policy you need not worry about the financial fallout of being made redundant or becoming unable to work due to accident or illness.
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