INSURANCE

Things Which IPI Will Not Cover

Income protection insurance, or IPI, can be an important tool in your family's financial risk management strategy. The weekly or monthly payouts from an income protection insurance policy can cover basic expenses, such as food, mortgage repayments, utilities and transport, as well as repayments on personal loans or credit cards. However, there are certain things which IPI will not cover. As you review income protection insurance policies and prepare for personal financial emergencies, consider the exclusions of standard IPI.

Income Protection and Redundancy

The purpose of income protection insurance is to replace a portion of your earnings, generally between 50 and 70 percent, if you should be unable to work because you have been injured or have become seriously ill. Accidental injury and illness are the only conditions of unemployment that are covered under IPI. If you should be made redundant because of an economic downturn, or if you should resign voluntarily for non-medical reasons, you will not be eligible for IPI benefits.

There are a number of different types of insurance available that will cover a period of unemployment caused by redundancy. Mortgage payment protection insurance, or MPPI, may be purchased to cover your home loan repayments if you should become unemployed because of redundancy, injury or illness. MPPI redundancy cover may be purchased separately through some providers if you are already covered for accidents or illness under another insurance scheme.

Payment protection insurance, or PPI, covers specific loans, charge accounts or credit cards in the event of a redundancy. PPI is generally sold alongside a specific loan or credit account. If you are unable to work because you have been made redundant or are ill or physically disabled by an accident, PPI will pay out for up to 12 months after you become unemployed. Whilst PPI benefits will not cover your living expenses, benefits may prove extremely valuable for avoiding late fees or arrears on specific loans.

Excluded Medical Conditions

Not all medical conditions are covered under IPI. Drug abuse, alcohol abuse, self inflicted injuries and injuries incurred in a war or during illegal activity are not covered. Physical ailments that are not considered debilitating, such as occasional back pain or occupational stress, may not be covered. If you are unable to work for more than 4 consecutive days, you may qualify for Statutory Sick Pay, or SSP, through your employer. However, your IPI provider may not pay out unless you have proven that your disability or illness qualifies for cover.

Pregnancy is not a covered condition under IPI. If you become pregnant, you are entitled to a total of 52 weeks of Statutory Maternity Leave. Statutory Maternity Leave may begin at any time within 11 weeks before your baby's due date. The first 26 weeks of leave are considered Ordinary Maternity Leave, and the second 26 weeks are considered Additional Maternity Leave. As long as you are an employee and you provide notice to your employer at least 15 weeks before the week of your baby's due date, you may qualify for benefits.

As you develop a strategy for coping with life's eventualities, consider the things which IPI will not cover. Although certain physical ailments and medical conditions are excluded from IPI, there are other sources of income protection that you may rely on in these cases. Take all of your options into account, including state benefits, personal financial resources and assistance from family members, as you plan for an unexpected loss of income. The more time you take to prepare for these contingencies, the better equipped you'll be to cope with a crisis.

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