Income protection insurance (sometimes called permanent life insurance) is an expensive long term insurance policy designed to assist you in case you are unable to work due to illness or you tare retirement. It ensures that you are still able to get a regular income until either you become disabled or are eligible to return to work again. While the main aim of income protection is to ensure you can afford to pay for the cost of a long term illness or injury, it is not the sole purpose of your policy. The policy can also be used to protect your assets in the case you are unable to earn an income and need to rely on your pension. With these two major benefits, it is no wonder that income protection has become a highly sought after type of insurance by both individual and company alike.
Finding the best income protection policy takes some time and patience. You should always compare policies in detail from a number of different insurance providers to find the one which provides the best cover and price for you. It is important to understand the difference between policy features and how they will affect your ability to pay and claim. Along with this, you should be aware of any limitations and exclusions in the cover. Once you have considered all these factors thoroughly, you are then ready to compare policies.
The first thing you should do when comparing your options for income protection is to decide what your needs are. If you want a lump sum of cash when you become ill then you should look at life assurance with at least 5% in place as your threshold for claiming. While some policies offer a steady income for a specified period after which you are eligible to claim, others pay out in instalments. A few may even pay you a dividend.
Some insurers will only provide their customers with annual premiums, which are based on your age and whether or not you are eligible for disability benefits. Others will pay you a lump sum once you have reached a certain amount as a maximum income level. The premiums that you pay are determined by how much you earn and how long you are unable to work before reaching retirement age. If you are unable to continue working then the value of the cover will decrease over time until it reaches zero. However, if you are still able to work then you will continue to receive payments until your death or payout from the insurer.
It is essential that you fully understand how the policy works before purchasing the cover. You must be clear about which expenses you will be covered for, and how these will be deducted from any monthly outgoings. It is also a good idea to consider how you intend to repay the lump sum should you need to claim. Some insurers will allow you to make a lump sum payment directly into the policy while others prefer to wait until the monthly income protection cover is depleted. This can affect how much you pay in premiums.
Many insurance companies offer a variety of income protection policies, which means that you should shop around to ensure that you get the best deals. Most insurers offer sickness cover along with accident, death and critical illness cover. While these covers are normally the most expensive, you could find that if you have a particularly serious accident or are diagnosed with a chronic condition, that this is adequate cover for your needs. Insurers will usually list the type of illness or accident that they will cover against. These are generally general sicknesses such as heart disease, cancer, diabetes, asthma and dental problems.
Critical illness cover is available at more affordable rates than most other forms of income protection. However, this does mean that you will miss out on some of the more generous benefits offered if you are diagnosed with a critical illness, such as cancer or heart disease. When you are receiving income protection, you should keep in mind that all medical costs, no matter how minor, are paid for in full by the provider. This means that you may have to live for a long time with the financial outgoings you have incurred, but you will never be put in a position where you have to make a claim for the cost of medical treatment.
A range of options is available from which you can choose the right income protection cover for your circumstances. If you need peace of mind when you are injured or ill then you may be better off choosing the lump sum income protection option. For those who are married, there are also covers that provide for the two of you in the event of a sudden breakdown of the relationship, divorce or death. No matter what your personal situation, it is important to make sure that you shop around before settling on one particular provider of health insurance or your own company.