The Claim and Payout Process
If you are injured in an accident or you become too ill to continue your employment, you may make a claim on income protection insurance, or IPI. Once your claim has been approved, you will begin receiving payouts once a month or once a week after the deferred period has ended. With the payouts from IPI, you may keep up mortgage repayments or rent, pay for food and utilities or cover the costs of transport. If you have enough income from various sources, your IPI benefits may be applied to student loans, charge accounts or credit cards, as well.
Making a Claim
Requirements for making a claim on income protection insurance may vary between providers. When you purchase a policy, you will receive a policy booklet and a Key Features brochure from your insurer, along with other essential insurance documents. The policy booklet should set out the specifics of your insurer's claims procedure. Your insurance documentation should also include your policy number and the telephone number for the claims department of your insurance company.
If you are seriously injured or diagnosed with a severe illness, contact your insurance company using the claims number in the policy booklet. You will be asked to provide basic personal details, such as you name, date of birth and policy number. You will also be asked for details about the circumstances of your illness or injury and the date your unemployment began. Your insurer may have paperwork for you to complete and may require verification of your health status from your GP.
In order for your claim to be approved, the circumstances of your unemployment must comply with your insurer's requirements. If you become ill because of a pre-existing condition, your claim may be denied. If you are unable to work because of a self inflicted injury, an injury that you incurred whilst committing a crime, substance abuse or a minor physical ailment, your claim will not be approved.
As you are waiting for your claim to be processed, you may receive Statutory Sick Pay if you are employed by a traditional employer and you have been unable to work for medical reasons for four or more days in a row. If you are self employed, you may apply for Employment Support and Allowance. As soon as you become unable to work, begin the process of requesting benefits from various sources so that you may safeguard your outgoings.
Receiving Your Payouts
When you purchase IPI, you will have the option to choose the deferred period, or the length of time that passes between the date of your unemployment and the beginning of your payouts. The longer the deferred period, the cheaper your premiums are likely to be. A typical deferred period may range from 3 to 6 months; however, you may have the option to choose other periods, as well.
The payouts you receive will generally represent approximately half of your regular gross income. Payouts are not subject to income tax, but when you are receiving IPI payouts, other tax benefits may be reduced. You may continue to receive payouts until your contract expires, or until you are fit to go back to work again.
It is important to familiarise yourself with the claim and payout process when you purchase income protection insurance. Review your insurer's requirements when you are feeling well, so that you may initiate the claims process efficiently if you are severely ill. By following your insurer's guidelines, you will ensure that your claim is processed smoothly and that you receive the benefits you need to remain comfortable until you resume employment.
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