Income protection would supply a replacement income if you become unemployed or incapacitated. You would then not have to struggle to find money needed to continue meeting your essential outgoings. The amount of income you could get back from your policy would be the sum agreed with the provider when taking out the policy and it would be tax free.
You would have to stand to so many days of redundancy or incapacity before you make your claim under your income payment protection insurance policy. With some providers this might be 30 days and with others it could be as many as 90 days before you could claim. Some might pay back your income to the first day of you suffering one of the events so you do need to check in the terms offered. You might then rely on this income over a 12 monthly period of your provider could offer you benefits over 24 months should you have to claim for this length of time.
You might be able to claim for carer cover if you have taken out your policy with a generous provider. This allows a claim to be made on the policy in the event that you had to give up working to take care of a close family member. You could also choose to tailor the policy to suit your lifestyle. You could protect against both events and then claim if you suffered either or you could just take a policy for redundancy alone or incapacity alone whichever suited your needs better.
Income protection as described above is actually a policy that would pay out differently from the policy outlined above. The policy above is actually called income payment protection. The other form of income insurance would pay out up to the age of your retirement if it was necessary but would only protect against incapacity and not redundancy. Therefore when considering protecting you repayments you would have to ensure that you are looking at the right type of protection.
Always check any form of income protection to make sure that cover would be suitable. Whichever provider you choose to take your insurance with there will be exclusions in the cover that might stop you from being eligible to make a claim. There will always be at least the most common exclusions which would include you having to work full time as opposed to being in a part time job. You would also need to have been working for a set amount of time when taking out the policy which is generally in the region of 6 months at least. You also need to live in the UK, Channel Isle or the Isle of Man to take out cover. If you were self-employed and wanted to take insurance then you would need to check the terms carefully. The same would apply if you suffer from a pre-existing medical condition as usually a claim might not be able to be made if you cannot work due that illness rearing its head. Providers can vary with the amount of exclusions so compare them at the same time as comparing cost.
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