Income protection insurance is a type of insurance that provides financial assistance if you are unable to work due to illness, an accident, or a disability. If you’re new to this insurance type or need some more information, here is a beginners guide to income protection insurance.
Income protection insurance: what it is
Also known as permanent health insurance, income protection insurance provides a monthly income if you are unable to work due to illness, disability or an accident, and it continues to pay out until you start working a paid job again, go into retirement, reach the end of a policy term, or die.
How it works
If you’re unable to work, it normally pays out between 50 and 65 percent of your income and covers most conditions that keep you from working temporarily or permanently.
It is worth noting that you will typically not be able to fully replace the exact amount of money you were making before you were forced to quit working with the total amount you would receive as a pay-out.
How you claim it
If you are sick or have a disability, you won’t be able to get income protection funds right away. Payments can begin as soon as four weeks after you quit working, but they might take up to two years. This is because you may not require the funds right away since you may be eligible for sick pay from your workplace, or statutory sick pay for up to 28 weeks after you finish working.
Depending on the individual policy, income protection insurance can either be claimed as many times as you require throughout the entirety of the policy’s duration, or only once.
What is the cost of income protection insurance?
Policies that provide income protection cover a wide range of diseases, illnesses, and circumstances. The money you pay in premiums every month depends on the insurance and your conditions.
Ultimately, the costs of income protection insurance is affected by a number of factors: your age, job, the number of illnesses you want covered, and the percentage of your salary that you’d like to cover. The cost can even be affected by your health, which can include various other factors like your current health condition and medical history.
You may be able to get group income protection insurance from your employer as part of a benefits or wellness package. This is often a lot more cost effective, and can either be taken straight out of your salary or even covered by your employer.
Is income protection insurance worth it for you?
Before you decide to purchase income protection insurance, you should first consider whether this insurance type is right for you. If you are employed by a company and are not self-employed, find out if you have access to sick pay, and how long it lasts. You should also determine what you would do if you were unable to work due to illness or injury.
Before you register for and take out any insurance policy, ensure you read the terms and conditions carefully to make sure that it fulfils all of your needs and requirements. You must be certain of what you could claim, and the amount you are most likely to receive.