What Does Income Protection Cover?
27 Jun 2019
These insurance products are often confused with Income Protection Cover and many seem to be under the impression that it is the same, or similar, to the widely mis-sold Payment Protection Insurance that are the subject of many a spam phone call - otherwise known as PPI.
We could go on and on, but you can probably grasp our point by now. Many people just don’t realise how invaluable Income Protection Insurance can be for their ability to get by if something bad happens to them, because they don’t realise what this type of insurance actually covers.
Differentiating Income Protection from the obvious competitorsIf you hold one or more of the above insurance policies, it’s possible that you do so because a salesperson persuaded you that you needed them. You might actually have the wrong insurance product for your circumstances and needs, and Income Protection Cover could be a much better solution.
As its name suggests, Income Protection Insurance – also sometimes referred to as IP insurance or Permanent Health Insurance – provides a degree of protection for your income. More specifically, it pays out a proportion of your usual income if you are unable to work due to injury or illness, meaning that you can keep on paying the essential bills such as your mortgage or rent payments.
When you take out an Income Protection Insurance policy, you’ll probably find yourself faced with a waiting period between making a claim and when the payouts start. Many policyholders opt for payments to commence after their statutory sick pay ends, or when other insurance ceases to protect them.
Another key thing to know about Income Protection Cover is that it pays out either until you can start working again, the policy ends, or you retire or die. You can also claim as often as you need to until the policy comes to an end, which differs from Critical Illness Insurance for example as this instead provides a one-off lump sum upon your claim.
It’s also important to acknowledge the difference between Income Protection Cover and Short-Term Income Protection. The latter – while it does pay out a monthly sum related to your income – only does so for a restricted period which is usually between two and five years. Also, this short-term cover might not protect you against certain illnesses or situations.
As for any scope for confusion with the notorious PPI, it was the way it was sold that largely led to it earning its rather unfortunate reputation. Regardless, you can benefit from much better coverage to protect you against injury or illness if you choose Income Protection Insurance. It covers most illnesses that render you unable to work, so you can be confident that you’ll be able to make a claim if you are signed off as unfit for work by your GP.
We can help you find your perfect policyEveryone is different with individual circumstances. That’s why it’s a good idea to talk to a LifeSearch expert so that we can get to know you and explain all the various options. We’d love to help - call our experts on 0800 316 7253.
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