Income protection insurance can greatly ease any financial worry as you would have a replacement income if you became involuntarily unemployed or incapacitated. This income could be put to use just as you did with your own income. You would have money for such as your rent, your gas and electric bills and even the grocery bill to keep food on the table for the family.

The income you would get back from the policy would be the sum that you chose to protect and which the provider had pre-agreed to. This income is paid back tax free to you over a period of time if you continue to remain unemployed or incapacitated. Generally this would be a period of either 12 or 24 months. You do need to have been unable to work or have been redundant for a certain amount of time before making your claim and this too depends on the provider. Some will set the deferment period at 30 days, with others it could be 60 or even the 90th day before you could make your claim. Some providers do date back to day one of you putting in your claim so this needs checking.

When considering taking out income protection insurance you do have to be aware that there are two different types of protection. Income payment protection is the policy that would pay out under the conditions outlined above. Income protection pays under different circumstances and would continue for up to the age of retirement if necessary. However it would not pay out for unemployment, it would only provide an income if you should become incapacitated.

You do have to check the small print of any income payment protection you are considering so that you know you would be eligible to make a claim on the policy. There are always at least the most common exclusions in any policy and these have to be weighed up against your circumstances as they could stop you from claiming on the policy.

Income protection insurance can be taken out to cover both unemployment and incapacity so that a claim could be made if you suffered from either of these events. You might not need to cover both if for example your employer gave you a good sick pay plan you might just want to cover redundancy alone, if so just take your policy for this event. Alternatively you might just want to take out a policy that would payout in the event that you were incapacitated. The events chosen go towards how much the policy would cost so this means you just pay for what you want. You could also check with the provider to find out if you would be eligible to make a claim on the protection if you had to give up full time work to take care of a loved one. Some providers will include carer cover in their protection; however you do have to check to find out if yours is one of the few that do.

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