In today’s economy it is very easy to see that job security is not as relevant as it used to be. With job losses mounting there is no guarantee that you will escape involuntary unemployment. If you are fortunate to retain your job, you can’t predict if or when you may suffer from illness or accident. If you want to protect yourself from these events the income protection insurance may be what you need.
This policy has two main purposes; it will provide a tax free replacement income if you were faced with sickness, accident or involuntary unemployment. The other important benefit is that it provides peace of mind.
The peace of mind occurs because the policy provides a short term cash benefit for 12 or 24 months depending on the provider you choose. This money can be used to maintain your lifestyle until the maximum period is up or until your return to work, whichever is sooner.
Applying for a policy is easy but you do need to meet the provider entry requirements. Typically this relates to your age, employment and residency status. You may be required to prove at least six months employment history.
When making a claim you will need to wait out the deferment period as set by the provider and this could range from 30 – 90 days.
Although income protection insurance provides a replacement income, you should know that the benefit will not replace your entire salaried income. There are maximum benefit levels which restricts payment to a percentage of your gross income. As an example some providers will only pay 50% of your salary or a maximum of £1,500.00.
You should also note that you can apply for cover on only one or two of the qualifying events and this could reduce your premium. If for instance you have a good sickness package from your employer you may not need this element of cover.
Another way to obtain a lower premium is by obtaining quotes from independent providers. They can offer huge discounts over the high street products.
Before you sign up for any income payment protection insurance policy, be sure to ask about any exclusions as this could prevent you from making a successful claim.
Income protection insurance is a vital form of protection as you may not always have access to state or company benefits to provide the help you need. By taking out your own protection you can rest assured that you can access the funds on your terms and when you need it most.
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