Comparing IPI Policies
A comparison of income protection insurance policies will guide you in the right direction when you're searching for ways to reinforce your financial stability. During a period of unemployment, a drop in income may quickly lead to arrears, late fees and rising interest rates on credit cards. Whilst state benefits may cover your basic living expenses, you may not have enough left over to pay off your car loan, credit cards, charge accounts or other debts.
Income protection insurance, or IPI, can offer tax free financial protection if you are unable to work because of an accident or injury. In order to get cover that suits your needs at rates you can afford, compare the features and costs of several policies before you make your final decision. Request quotes from multiple providers to determine which insurance company offers the maximum income protection for the smallest price.
Comparing IPI Costs
IPI payouts are not intended to replace your entire salary. Payouts generally equal between 50 and 70 percent of your gross income, dependent on the provider and the amount you earn. As you compare policies, note the percentage of your earnings that will be paid out and the extent of your coverage period. The higher the payouts and the longer the coverage period, the higher your premiums may be. Look for a policy that offers substantial benefits at the lowest rates.
Insurance providers consider your age, health condition, the danger level of your occupation and the amount of money you earn when they determine the extent and cost of your cover. However, not all insurance providers will place equal weight on factors like age, health or occupational risk. You may get a cheaper quote by taking time to review estimates from several providers. In most cases, IPI will not pay out for pre existing conditions, injuries caused by war, drug or alcohol abuse, deliberately self inflicted harm or pregnancy.
You can compare the specifics of IPI policies by reviewing each provider's Key Features document. The policy's key features may be printed in a brochure or posted on the insurer's website. In this document, you will find the most important terms and conditions of the policy set out in layman's terms, without the legal jargon of a contract. You are free to review a policy's key features before making a decision about which IPI policy you wish to buy.
Comparing Terms and Conditions
As you evaluate IPI policies, compare the terms of coverage for different products. Most standard IPI policies pay out for unemployment caused by illness or injury only. However, some insurance providers offer short term income protection, usually for 12 months, for unemployment caused by redundancy. Mortgage protection insurance often covers redundancy as well as accidents or illnesses. If you are concerned about the effects of an economic downturn on your household finances, consider a product that offers redundancy protection.
Insurance providers must give policyholders the option to renew IPI, even if they have had a change in health status. Renewable or reviewable policies are renewed at regular intervals, usually every 5 years. With each renewal cycle, your rates may increase as a result of your age or a change in occupation or health condition. However, reviewable and renewable policies are generally cheaper during the initial period than traditional fixed premium cover.
Comparing IPI policies is an important step in the process of securing your monthly outgoings. Consider several policies from reliable, FSA authorised providers. A thorough review of the terms, conditions, benefits and costs of several policies will help you to make a decision with confidence.
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