INSURANCE

Reviewable IPI

Throughout your career, income protection insurance can give you greater peace of mind about the security of your salary or wages. Even the most stable income can be compromised by a debilitating illness, a severe injury or an accident. Income protection insurance, or IPI, is a valuable tool in your effort to protect your family against the financial consequences of a job loss. Reviewable IPI may be renewed every few years, so that you can maintain your cover as long as you're employed.

Choosing an Income Protection Policy

Income protection insurance pays out a certain percentage of your salary if you become unemployed because of an illness or physical disability. With your tax free IPI benefits, you can pay for groceries, utilities, transport, your rent or mortgage and other debts. Your weekly or monthly reviewable IPI payouts can supplement your personal savings or state benefits, so that you receive sufficient funds to cover your expenses until you are able to work again.

Reviewable IPI is a popular variation of income protection insurance that gives you a cost savings at the beginning of your coverage. If you have been reluctant to invest in IPI because you're on a limited budget, a reviewable policy gives you the opportunity to pay for cover at a lower rate for the first year or more of your protection. Traditional fixed rate IPI is generally more expensive than renewable cover for the first few years. If you choose to renew your reviewable IPI policy, you may do so at the end of the contract.

Your rates for reviewable IPI will be reviewed by your insurer and may be increased. However, your insurer is bound by the terms of the policy to renew your cover, even if you've had a change in health status. Unlike rates for renewable IPI, which are based upon your individual risk factors, such as your age, medical condition, occupation and claims history, rates for reviewable IPI are based upon rates for the general population.

With reviewable IPI, you don't have to worry about your rates being increased because of claims you've made in the past. However, the cost of reviewable IPI nearly always increases with each renewal based on statistics for the general population. Before you choose an income protection policy, compare the overall costs of reviewable IPI to renewable IPI or fixed premium IPI. Fixed premium IPI offers fixed premiums in exchange for a set benefit for the duration of the contract.

Reviewable Policy Restrictions

Reviewable IPI can give you a greater sense of security about your family's future. However, there are certain restrictions that apply to income protection insurance. Payouts are made only for illness or injury, not for redundancy or voluntary resignation from your job. Your claim may be denied if you request a payout due to a self inflicted injury, substance abuse, pregnancy or injury in an act of terrorism or war. Benefits are limited to a total maximum sum, which is paid out over the duration of the contract.

If you become unemployed and your insurer agrees to a payout, you may have the option to waive your IPI premium payments until you are able to resume work. Your payouts will continue until return to your job, retire, pass away or until the contract ends. If you start a new occupation with a higher risk level than your former job, you won't have to worry about whether your rates will increase as a result if you have reviewable IPI. Consider the advantages and costs of several types of IPI to choose the cover that best suits your circumstances.

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