Unless one is lucky enough to be born into money or win the lottery, the chances are that they will need to work, but what if you were unable to perform your duties as part of your employment? In the absence of a very generous employer sick pay package or a robust national social security system, the vast majority of people would suffer. This is particularly pertinent to those with young families, other financial dependents and those who are self-employed. What would you do? Who would you turn to? If you can’t answer those questions, income protection insurance is absolutely vital.
Income Protection Benefits that Outweigh the Premium Cost
Ok, it is another outgoing you could do without, but looking at the bigger picture, the premium payments are nominal when compared to the peace of mind that comes from knowing that your standard of living and associated commitments will be covered if you are unable to work for a period of time.
Income Protection Insurance steps in if you are:
- Diagnosed with an illness that prevents you from working
- Have an accident/sustain an injury which leaves you unable to work for a fixed amount of time
However, it’s important to note that, at the time of writing, income protection will only cover up to 70% of a salary. This should be enough to keep up with mortgage payments/rental payments, household bills, school fees and other essential monthly outgoings.
Paying Attention to Income Protection Policy Details
Aside from the aforementioned benefit cap of 70%, potential policyholders should also double-check details relating to:
- Waiting Period – Payments don’t usually start from day one of the sickness or injury. Ensure you have enough financial resources to wait out the deferment period. (Generally speaking, 1-6 months)
- Term Limits – Discuss with your insurance provider how long you want the policy to last. Shorter term policies may be capped at 1-2 years per claim.
Scenarios where any Claim may be Refused
It’s important to note that any claim is likely to be refused if:
- Details regarding medical history are purposely omitted from the application
- Injuries/illnesses that are self-inflicted or as a result of illegal behaviour
- An injury that arises as a result of a high-risk activity or sport
Like any important insurance policy, it’s important to speak with the insurer directly if you are unsure about any policy detail or wording.
Finding your Trusted Insurance Partner
Whether you are actively looking for an income protection policy today or just want to explore the market a bit, finding a reputable insurer online is easy. If you do decide that this kind of insurance is a good fit for your existing portfolio, don’t solely focus on the price of the premiums; rather, look at what they offer and assess whether they offer the level of protection you need.
Don’t just skim through the online ads you see; if you see a policy that you think fits your current needs and budget, contact the insurer directly and speak to a real person with real industry experience. A reputable insurer will recommend the best policy for you and perhaps bundle any existing insurance products you have into a competitive package.
