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What is Income Protection Insurance Cover?
Income protection insurance pays out a regular income to you if you are unable to work because of sickness or a disability. These payments will continue until you return to paid work or until you retire.
Income protection insurance is sometimes referred to as permanent health insurance.
The amount of money that you are able to claim won’t replace the exact amount of money that you would have earned prior to having to stop working. Often this is around half or two-thirds of your regular income before tax. You will have some money taken off for the state benefit that you will be able to claim.
The payments that you receive from the policy will also be tax free.
There will be a delay in the time that you can claim income protection payments. You will have to wait a minimum of four weeks before you can make a claim and payments can start up to two years after you have stopped work.
This is because you might not require the money immediately as you may be eligible to receive sick pay from your employer. For up to 28 weeks after you have stopped working, you will also be able to claim statutory sick pay.
Do I need Income Protection Insurance?
Before you take out income protection insurance, you should first of all check that you don’t already have income protection insurance as part of your employee benefits through your work. Some employers provide this as a benefit. Check with your staff handbook or your employer’s HR department to find out.
Check to ensure that you don’t have some other form of illness insurance as part of another insurance policy. You may have this bundled with your mortgage.
How much does Income Protection Insurance Cost?
There are several factors that will affect the cost of your income protection insurance. These include your age, your health, the type of job that you do, your hobbies, and your lifestyle, and the waiting period before you make a claim. Your insurance will also cost less if you are willing and able to do other kinds of work if you get ill.
What do you need to think about before you take out Income Protection Insurance?
Before you take out income protection insurance, you should always check the terms and conditions to make sure that it meets your needs.
Find out if there any any exclusions that apply to you. You’ll want to know how long you will need to wait for the policy to pay out, as well as much you’ll get if you did need to make a claim.