Costs of IPI
When you're shopping for the best income protection insurance, or IPI, cost will play a part in your decision. To find a policy that offers the most financial protection for the least amount of money, compare quotes from several providers. The insurance company you choose is one of the most important factors in determining how much you'll pay for this valuable financial cover.
IPI pays out to replace a percentage of your income, generally between 50 and 70 percent of your gross earnings, if you become unemployed because of an illness or accident that leaves you incapable of doing your job. The amount of coverage you need will depend upon your income and the additional resources that you plan to draw from in the event of a job loss. State benefits and personal savings may be applied to your household expenses when you are unemployed. The higher your IPI coverage limit, the more costly your IPI premiums will be.
Types of Income Protection
Working professionals who rely on their earnings to cover priority expenses and pay off debts may choose from several types of income protection to avoid the disastrous financial consequences of long term unemployment. Fixed premium IPI is the standard for income protection insurance, providing benefits in exchanged for premiums that are guaranteed not to rise or fall throughout the coverage period. Renewable and reviewable IPI are available for policyholders who foresee the need to maintain IPI coverage well into the future.
Renewable and reviewable IPI are cheaper during the initial coverage period than fixed premium IPI. At regular intervals, usually every 5 years, you may renew your cover. Your insurance provider may not discontinue your coverage if you've had a decline in health; however, your rates may be increased if you've had a change in your health status or if you've switched to a high risk occupation. Rates may also be increased to reflect your age.
Like renewable IPI, reviewable IPI is cheaper in the beginning than a standard fixed premium policy. The cost of a reviewable policy may increase with each renewal period. However, the rate increase will be based upon general rates, not changes in your individual condition.
Increasing IPI and index linked IPI are typically more costly than fixed premium policies. With increasing IPI, benefits increase over time to reflect the rising costs of living, resulting in higher premiums. Index linked IPI has an investment element, which may increase in value through profits earned from your insurer's investment funds. Index linked IPI may cost more than traditional IPI because a percentage of your premium payments is distributed to your insurer's investment funds. If these funds are profitable, the value of your payouts may rise.
Factors that Drive IPI Costs
The cost of IPI is determined by the type of policy you buy, the extent of your cover and your deferred period. As the policyholder, you may set the length of time between the end of your employment and the beginning of your payouts. The longer the deferred period, the lower your premiums may be.
Your age, your health status and the risk level of your occupation also drive the costs of IPI. The higher the risk that you will be unable to work because of an illness or injury, the more costly your coverage will be. If you have a dangerous job, such as an airplane pilot or a coal miner, your risk of injury is greater than that of an accountant or sales representative. If you change occupations during the course of your cover, your premiums may change to reflect the risk level of your new occupation.
Financial Protection
When You Need it Most
We're Protected. Are You?
What People Are Saying
Being able to instantly compare quotes made finding a great insurance policy very simple. I appreciated how quick and painless it was.
Ruby A, Cardiff UK
