We live in a world where the unfortunate happens all the time and while we like to think we are in control, we are not. You can never tell if or when you are going to lose your job, fall ill or have an accident. These events will have an impact on your income and thus your ability to maintain your monthly bills. If you had income protection insurance however, you could survive a temporary financial blow.
This insurance will pay out a monthly tax free cash sum if you are faced with one of the income altering events above. The policy will pay out for 12 or 24 months or until you go back to work if this is sooner. The exact maximum payment time is subject to the terms and conditions of the provider you choose.
With these policies you can choose coverage for any of the three events, you don’t have to cover for all as providers are very flexible.
Once you’ve met the entry requirement of the policy your cover can begin but you do still need to look out for exclusions.
The eligibility criteria relate to age, residency status and employment position. It is easy to get past these. The exclusions are another story however. They relate to things like existing medical conditions, foreknowledge of redundancies, seasonal work and sickness due to stress for example. It is important to know what these are and make sure they do not apply to you.
In order to make a claim you will need to wait out the 30 – 90 day deferment period. Once your claim is successful you can expect to receive the agreed benefit amount.
It should be noted that income protection insurance providers will only pay a percentage of your gross income or £1,500 whichever is lesser.
Most providers will allow you to make multiple claims on their policy and some offer age-related policies. This means you may get a cheaper premium depending on your age.
With redundancies being announced every day, the number of claimants for state benefits is on the rise. If you have no savings, can you afford to join the line? By protecting your income, you are protecting yourself against stress, worry, a poor credit history and potential financial ruin.
When it comes to purchasing your income protection insurance don’t be put off by the number of providers on the market, if you want to evaluate options you can use price as a guide.
Independent providers will offer you the most savings when compared to banks or other high street providers. In fact the premiums could be up to five times cheaper.
The benefits of income protection insurance are clear to see, beside the financial benefit, it will offer you peace of mind, Even if you faced one of the qualifying events, you will be able to get through the experience.
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