INSURANCE

Income Insurance Protection

With income insurance protection, you can prepare for the eventualities that might undermine your financial stability. Even young, healthy breadwinners with stable jobs can fall prey to severe illness or a sudden injury that prevents them from working for a certain period of time. Income insurance protection gives you the financial protection you need to keep up mortgage and auto loan repayments, pay household bills, cover the costs of groceries and utilities and keep your family comfortable and safe until you're on your feet again.

Whilst public benefits such as Statutory Sick Pay and Employment and Support Allowance will cover some of your most basic living expenses during a prolonged illness, most families find that these benefits pay for only their minimal requirements. Repaying secured debts, credit cards and personal loans may be difficult or impossible if you rely on SSP and ESA. Income insurance protection can replace a significant percentage of your income, allowing you to maintain a stable standard of living as you recover.

Benefits of Coverage

Income protection insurance, or IPI, is a form of financial protection that replaces the income you earn if you are unable to work due to an accident, an illness or a disabling injury. Benefits from income protection insurance are tax free, so you can apply every penny to your living expenses whilst you are recovering your health. An income protection insurance provider may not cancel your policy or refuse renewal as long as you continue to pay your premiums, which are generally quite affordable for most households.

As the policyholder, you may determine how much time should pass between the day you become unable to work and the date your payouts begin. Extending this time, known as the deferred period, may result in a higher payout; however, you will need to have funds put away to cover your living expenses until you begin claiming your benefits. If you choose a deferment period of one month, for instance, you must keep at least one months' wages stored away for such emergencies.

Payouts are generally made weekly or monthly after the deferred period ends. After this point, payouts continue until the policyholder resumes work, retires, passes away or the term of the contract ends. With the benefits from income insurance protection, policyholders and their families can cover their living expenses, keep up with bills and avoid the severe financial consequences of an unplanned job loss. This form of protection has helped many professionals maintain their credit rating and avoid falling into arrears during a personal health crisis.

Types of IPI

Fixed premium payments are the standard for most income insurance protection policies. Over the course of his or her cover, the policyholder pays a level premium that neither rises nor falls for the duration of the contract. The higher the coverage limit on a fixed premium insurance policy, the higher your premium will be. Group insurance is available to businesses that wish to offer this benefit to their employees.

With renewable income insurance protection, the contract may be renewed periodically, often every 5 years. Renewable IPI usually begins with lower premiums than a fixed premium policy. At the end of each renewal period, the contract is reassessed, and premiums may increase as the policyholder ages. If you switch from a low risk occupation, such as a secretary, to a higher risk occupation, such as an emergency worker, the cost of income insurance protection will increase, as well.

Reviewable income insurance protection is similar in structure to renewable IPI. Premiums are lower during the initial period than a fixed premium policy, but when the policy is reviewed at the end of each contract period, rates may increase. Rather than rating the policyholder on factors such as health and occupation, however, the costs of reviewable income insurance protection are based upon general rates.

Restrictions and Exclusions

IPI policies have a benefits limit, which prevents policyholders from continuing to remain unemployed in order to collect payouts. Benefits are only paid out for accidents, injury or illness. Employees who are made redundant due to an economic downturn or who resign voluntarily are not covered under IPI. Certain health conditions are excluded under IPI, such as substance abuse, self inflicted injury, injuries incurred due to acts of war and pregnancy. Benefits are tax free, but other forms of tax relief may be reduced as a result.

Income insurance protection gives you greater peace of mind about your household's financial stability. For a reasonable premium, you can cover your salary or wages in the event of an unforeseen health condition that keeps you from working. Compare quotes from several of the leading IPI providers to find a policy that offers the coverage that you and your loved ones need at prices that suit your household budget.

We're Protected. Are You?

Get Quotes Now