Income protection insurance is also known as IP insurance. Furthermore, it offers financial support to policyholders who are unable to work due to illness or injuries. So, you can say that this type of insurance is a safety net that gets you covered when you are injured or sick at work.
Additionally, income protection insurance covers the bills and takes the financial pressure off your shoulders while you recover from your illness or injury. With this type of long-term insurance, you will still enjoy and get your regular income until you can return to work or retire. If you would like to learn about this type of insurance coverage, read through this article.
How Does it Work?
Unlike other insurance products where you get a payout after filing a successful claim, with income protection insurance, you get a monthly benefit. What’s more, when you purchase this insurance, you can choose the amount of income you wish to insure, the waiting period, and the benefit period.
The waiting period is the duration you need to wait before you become qualified for a claim. Normally, you can select between 2 weeks and 2 years. Meanwhile, some insurers or insurance companies provide day-one accident or immediate coverage.
The insured income is the amount of money that can be replaced, and as for the benefit period, it is the duration of how long the insuring company will continuously be making monthly payments. Moreover, it is usually 2 to 5 years.
What Does Income Protection Insurance Cover?
In this section, you are going to learn about the coverage that income protection insurance offers. So, if you have this type of policy, here are the coverage options that you can enjoy:
- Inability to come to work due to an injury or illness.
- If you have used up all your sick leave,
- Unable to work.
So, if you cannot come to work because of a partial or full disability, this insurance pays:
- Up to 70% for a particular time after 6 months.
- Up to 90% of your pre-tax income in the first half of the year.
To sum up, income protection coverage is created to replace your income using your yearly earnings.
What Does It Not Cover?
Although there are good coverage options that you enjoy when you get this insurance, there are also some situations in which your income protection policy will not cover you. For instance, self-inflicted injuries, military service, and pregnancy. What’s more, the insurance will not immediately replace your income because of your sick period.
How Much Does Income Protection Insurance Cost?
The cost of this insurance is determined by different factors. On average, you can get a good income protection insurance policy for as little as $50 per month in the United States and £10 per month in the United Kingdom. But the insurance company or insurer is also a huge factor affecting the cost of income protection insurance.
Other affecting factors include:
- Your occupation.
- Percentage of income you want to cover.
- Family medical history and current health.
- The injuries and illnesses covered.
- If you are a smoker or not.
- Waiting period.
The amount you also pay to get this insurance depends on the type of plan you are purchasing. There is a standard premium plan and a guaranteed premium plan. But keep in mind that the guaranteed premium plan is slightly more expensive than the normal plan.
How To Buy Income Protection Insurance
Buying or applying for income protection insurance is very easy. If you follow the right steps and procedures, you will be able to purchase a quote online or from a local agent. But first, you should talk to a financial adviser for advice. Here is how to apply for and buy a policy:
- Open up about your medical history.
- Select the perfect level of coverage.
- Compare the rates.
- Research the lenders.
- Find the perfect lender with the best terms and coverage.
- Visit their official website.
- Submit other important details and documents.
Once you are done, submit your application online and wait for a response. What’s more, you can get a quote from an insurance company, an insurance broker, or a financial adviser.
The Best Income Protection Insurance Companies
Not all insurance companies offer income protection Nonetheless, there are still insurers that you can get a quote from. Moreover, their services can be accessed physically or online, depending on the application process. Here are some of the best insurance companies to check out:
- Mutual of Omaha.
- Royal London.
- Aviva Life & Pensions.
- Wesleyan Assurance Society.
- British Friendly Society.
- Shepherds Friendly Society.
And many more. So, you can check out these companies and their official website to apply and get an income protection insurance policy.