Understanding Income Protection Insurance

However, before buying this cover online, let us first understand income protection insurance.

Income Protection Insurance (IPI) is an income insurance policy that pays policyholders a fixed amount of money either weekly or monthly if they are unable to work due to illness or accidents.

Otherwise known as salary continuance insurance, this type of insurance can pay up to 75% of the gross annual income of the policyholder in the event that the policyholder is unable to work due to illness or injury.

Usually, a good policy pays out after 30 days that a policyholder is unable to work and will continue to pay out until the policyholder is able to return to work or until the cut-off age of 65.

Importance of Income Protection Insurance

In this current economic climate, amongst the best insurance policies to get is income insurance for it provides a number of benefits in comparison to other insurance policies such as:

1. Peace of mind for it will provide financial security in the event of unforeseen circumstances such as unemployment due to illness or injuries

2. Payments of benefits are paid regularly either weekly or monthly

3. Payments of benefits are payable in times after the policyholder is unable to work and will continue until the policy holder returns to work or until retirement or the term of the contract ends

4. The monthly or weekly benefit payments paid from the policy to policyholders are free of income tax and National Insurance contributions

5. Insurance company does not have the authority to cancel or refuse to renew the policy provided that the policyholder continues to pay the premiums

6. May provide a waiver of premium option whereby IPI policy premiums are not required while the policy is paying benefits, but the policy cover continues as normal

7. Provides additional benefits that are usually offered for no cost that includes death benefits, cosmetic, or other surgery benefits and transplant benefits

Income insurance provides the needed financial security and peace of mind that you and your family need should you become disabled and unable to earn an income.

There are many insurance companies online that offer income protection insurance. If you want to have the best and the most suitable for you, compare income protection insurance rates and benefits and all other significant details. In this way you will be able to choose from the numerous numbers of insurance companies that offer the most suitable for you.

Choose an income protection policy with the right level of cover for your situation - consider income protection insurance's limitations on how, when, and for how long you are covered. Do not hesitate to do a thorough research online or ask your friends and families who have already purchased such insurance. In this way, you will be suitably informed of the best income protection insurance for you.

Income Protection Insurance Could Give You A Replacement Income

The majority of income protection insurance policies would begin to pay out once you had been off work for a continuous period which can be anywhere between 31 and 90 days after the event and depending on the provider. The amount of time that a policy will pay can also vary but it is usually somewhere between 12 and 24 months, again dependent on the provider.

Buying cover from a standalone provider is the best way to secure yourself the cheapest premiums for the cover and the cost can vary tremendously. It is essential to check the small print or key facts of the policy before you buy because this is what will allow you to decide if income protection insurance is right for your circumstances.

While providers can add in exclusions there are some that are typical to most policies. If you are in self-employment, retired, only working part time or suffering a pre-existing medical condition then a policy would not be in your best interests. By shopping with a specialist for the cover you will be given access to the key facts and exclusions which makes determining if you would be eligible easier.

In the past income protection insurance has and in fact still does give cause for concern. This came about after the Citizens Advice made a super complaint to the Office of Fair Trading. Following this an investigation by the Financial Services Authority (FSA) began which resulted in several high street names being given fines. The Competition Commission began a review of the sector which is still ongoing and the FSA continue to keep the sector under their watchful eye.

Recently the FSA announced that while some changes have been made to the way that cover is sold, many firms are still not following guidelines properly. Just recently a mortgage firm was fined and not only was the company fined but also the Chief Executive, who was handed a personal fine. Clearly many more changes still need to be made to make the products more transparent to the consumer and it is hoped this will be seen in March 2008. Comparison tables will appear which should make choosing such as income protection insurance easier. The tables will ask a series of questions which will lead to the consumer being able to tell which product would be in their best interest and also tell the about exclusions and how much the cover will cost.

For now the safest option you can take when it comes to buying income protection insurance is to stick with a standalone specialist for your cover and be sure that your policy will come with the key facts needed and is backed up by experience in selling protection cover of quality.