Income Protection

Understanding what you get from Income Protection Insurance.

For many, they give their policies a brief overview and then file their agreements away until such time as they need to produce their documents to file a claim.

This can be the clinching part when many realise that what they thought they were covered for, in actual fact, isn’t as accurately described on their policy. First point to take on board then is gaining the correct understanding of your policy and the benefits you will receive if you become ill, suffer an accident or in some policy cases, are made redundant. Some insurers will only give you information if you request it, however there are specialist income protection insurance companies who offer a much more personal and bespoke service.

What you get with the right income protection cover is a tailored and customised policy that is worded to offer you the most benefits at a competitive price that is cost effective and easily affordable. Gaining a policy with the least restrictions will give you the most effective policy, enabling you a better chance of making a successful claim if you find that you cannot work or earn an income. As mentioned in a previous article published earlier, you can usually expect to receive a capped allowance if your claim is successful and for many insurers this figure is approximately 70% of your gross earnings. By saying ‘gross’ the general consensus is the figure before your tax and National Insurance are deducted.

However you may not know that the percentage drafted for higher incomes can be much less than the set average, so understanding the level of your cover from the start is crucially important. Don’t forget that with the deferred time period between making your claim and receiving your benefit you may be up to a month without any form of income so it is always best to try and create separate savings to cover you or discuss the possibilities of taking payment holidays with your mortgage provider, loan companies, local council tax office or utility providers.

Either way, once you begin receiving your policy payouts, they can last for as long as you need them, giving you the peace of mind that you have the finances to pay the core bills and monthly outgoings that otherwise you would struggle to pay.