There are all sorts of safety nets which can help when you are in various tight spots. Anyone who has a car has to have a form of insurance to drive it, while people also choose to protect their homes with insurance policies. But households and individuals can even guard against financial strife with cover products which effectively back their ability to meet commitments in a crisis. For example, income protection will provide somebody with cash handouts should they ever lose their job through no fault of their own.
There are a wide range of insurance providers who will do this, and all someone needs to do in exchange is supply a small premium. The insurer will then pay a regular cash sum into someone’s account after a successful claim, and will typically give them a percentage of what their regular income would have been before they lost their job.
To qualify for cover, somebody normally needs to have lost their income due to accident and injury, or involuntary redundancy, or illness. All of these things could lead to someone losing their job income, leaving a question mark over how they will meet financial commitments like bills, rent, or mortgages. People may also have credit cards and other debts which they would be worried about.
After a successful claim, an insurer will start to pay them the agreed cash sum every month. The first sum will arrive between 30 and 90 days after a claim, depending on the policy. The payments will continue for as long as 12 months, while some will pay out all the way up to 24. Some insurance companies will even backdate their regular payments to up to the first day you were without your income, meaning you do not lose out due to the time lapse.
You can even protect against specific circumstances. For example, you may be more worried about involuntary redundancy than anything else, so you can protect specifically against this. Likewise, you can get cover only for accident and injury, or only for illness. In this sense it is possible to tailor a policy to your specific needs. The amount you get normally involves a percentage of what you would have got if you were still earning. So, for example, you might be able to insure 50 per cent on a policy, meaning you would get £700 if you earned £1,400 per month.
Note an income protection policy will normally involve no stipulation on what you spend the payouts on. You are free to spread them across your commitments as you see fit. You might want to spend a few pounds on mortgage or rent commitments, plus some more on utility bills and groceries.
Note income protection can be bought not just from the big insurance companies which many people turn to for other forms of cover, but also from some specialist providers which deal in just the sort of cover.
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