This type of policy allows us to provide financial security when, due to an injury, an accident or poor health we cannot carry out our professional duties and earn money. The benefit is paid out monthly after specific illness has been confirmed by a doctor. The most common grounds for the benefit to be paid out are: broken bones, back problems, depression, cardiovascular diseases, and cancer and road traffic accidents.
The policy is highly flexible; therefore it is important to tailor one’s individual needs to the following factors:
- Type of Incapacity – insurance providers define incapacity in different ways, therefore it is important to choose an offer that will guarantee a return to our profession. If this option is unavailable, and during a long absence from work, insurance provider might ask the insured to obtain different qualifications and the benefit amount will be reduced (e.g. a tiler with a broken knee, after physiotherapy, will still be unable to do his job and might be asked to look for employment as an administrator in an office)
- Deferred Period – this is the initial period of time after the accident or the beginning of the illness which is not covered by the insurer. Usually it is the first 4 weeks. It can be changed to 1 week, 3 months, 6 months or even 12 months. People who are in permanent employment, are usually entitled to sick pay, e.g. for 3 months so they can choose their Deferred Period to be 3 months. Self-employed people usually choose 1 or 4 weeks’ long Deferred Period.
- Maximum Benefit – it depends on the amount of taxable earnings and can be as high as 70% of the earnings.
- Maximum Pay-Out Term – depending on the insurer, the maximum pay-out term for the benefit, if we are unable to work, can be 1 year, 2 years, 5 years or the entire duration of the policy.
Income Protection Insurance is one of the most complex insurance products and also one of the most necessary ones, from the point of view of people who work. Our professional service allows you to consciously choose the best and the most beneficial option from our wide range of insurance providers.
There are other providers of Payment Protection Insurance [Short-Term Income Protection] and other products designed to protect you against loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk
Did you know that…?
Income Protection Insurance, with monthly benefit of £1000 can be purchased from £23.91 per month?*
*This quote from 06/07/2018 is an estimate only for a 30-year old non-smioking male, occupation: warehouse worker; insured until the age of 68; Deferred Period: 1 week; maximum pay-out time – 2 years. Increasing age-costed reviewable premiums. Insurance provider – The Exeter.
The actual premium will depend on individual circumstances.
There are other products available designed to protect you against loss of income. For more information visit www.moneyadviceservice.org.uk or contact one of our advisers.
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