Income protection could stop you having to struggle financially if you lost your monthly income. A sudden loss of income through unemployment or incapacity could leave you having to struggle just to put food on the table for your family. With a policy to rely on should the worst happen you would at least have a substantial amount of income to rely on and use towards your essential outgoings.
The amount of tax free income you could get from benefit from your income payment protection insurance is the amount you choose at the time of applying for your policy. This sum would need to be agreed by the provider you choose and is paid back once you have been unemployed or incapacitated for a period of time which could be as little as the 30th day but it could be up to as long as the 90th day. Your income might continue paying over 12 months or some providers might payout for up to the 90th day. However if you should have to claim until the term of the policy your benefit would cease at this time.
You would have to ensure that you are taking out the right type of insurance for your needs as there are two type of insurance. Income payment protection insurance is the type outlined above. Income protection on the other hand would pay out an income for up to your retirement age if necessary but it would not payout for redundancy.
You could choose to take out your income payment protection to protect against unemployment or incapacity together. You would then be able to make a claim on your policy if you become a victim to either event. However if you got a good sick pay plan for your employer then you might just want to take out a policy that would payout in the event that you become redundant. You could just take out your protection against incapacity if it suited your needs better. You could also check your policy to find out if your policy would pay out carer cover as some generous providers will include this in your policy. You would then be entitled to claim on your protection if you had to stop working to take care of a family member who became incapacitated.
Finally before you take out your income protection insurance you would have to check the terms and conditions to ensure that you would be eligible to make a claim on the insurance. There could be just the most common exclusions which could include having to work full time and have been in work for a period of no less than 6 months at the time of applying. However there could be many more exclusions included in your policy so you really do have to check the small print. You would also have to check the small print if you suffer an illness that is pre-existing as usually you could find you cannot make a claim if you had to stop working due to this illness. Also go over the terms if you are self-employed as you would only be able to make a claim if you were to have to cease working permanently.
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