The coronavirus pandemic has shown us all that the future is by no means certain. These unprecedented times have had an adverse impact on businesses and individuals across the globe. It is vital to take steps to protect yourself and your family in the event of any unexpected illness or injury making you unable to work.
Income protection insurance can be the ideal way to ensure that your family will be taken care of and your bills paid even if the worst should happen and you cannot work. This article will explore the many benefits of the insurance, who it covers and how you can take it out.
What Is Income Protection Insurance?
Income protection insurance is a type of policy that pays out up to 70% of your monthly salary if you become unable to work. This could be because of accident, illness, or injury. It can be a short- or long-term payment, depending on the nature of what is keeping you from work.
Often you will start receiving your insurance pay-outs after a set deferral period. This could be as little as a few days or as long as a year. Having a long deferral period can be beneficial for people who have generous sick pay coverage with their employers, as it means that your income protection will kick in after any sick pay benefits have ended.
Who Can Benefit?
Any worker can benefit from income protection insurance. It can be a valuable safety net and ensure that you can pay essential bills. The peace of mind that can come from having a policy in place cannot be understated. Often, people take out the insurance at times of significant change, such as when they buy a house, have a child or as they get older. It can also be very beneficial to self-employed people who do not have the safety net of workplace sick pay.
When Should You Take It Out?
You can take out income protection insurance at any time. Often you will find that the insurance is cheaper the younger and healthier you are. While pre-existing conditions won't necessarily preclude you from taking out the insurance, they can make premiums more costly. It can also be beneficial to take out cover when you receive a promotion at work or, as mentioned above, in the event of significant life events like buying a home, getting married or having children.
What Kind Of Income Is Covered?
There are policies available to suit any work. It is a good idea to find out what kind of policy you could expect to take out. A great way to do this is by getting in touch with expert financial planning services like Drewberry. You can learn more about income protection insurance by talking with Drewberry and going over the various options, insurance providers and policies out there.
How Do You Make A Claim?
To make a claim, you will need to contact your provider, letting them know that you cannot work. You will also need to provide evidence of your illness or injury. Once your claim has been approved, your deferral period will kick in, after which you will start to receive your benefits.
Does It Cover Pre-Existing Conditions?
If you have pre-existing conditions, it may make taking out income protection insurance a little more complicated. It is best to discuss your situation with the provider you are considering to understand how it will affect your ability to get insurance and how much your premiums will be.
Some insurers will accept people with pre-existing conditions with increased premiums to cover the additional risk of covering someone with existing health concerns. Other insurers will provide coverage but will exclude the pre-existing condition, while others still may offer a standard policy.
How Much Will It Cost?
The cost of income protection insurance can vary. As mentioned above, if you are older or have pre-existing conditions, premiums may be more expensive. The younger and healthier you are, the lower your premiums will be. You may also find that your policy will be more costly if you are a smoker due to the many health concerns that can arise related to smoking.
The Advantages Of Getting Covered
There are many advantages to getting income protection insurance. It can help give you peace of mind that your expenses will be covered if the worst should happen. This can be particularly beneficial for those with mortgages or children to care for. It can also be a much-needed safety net for those with little or no access to good sick pay.
The Bottom Line
Income protection insurance can be an excellent way to prepare for whatever the future may throw at you. While many of us don't consider what might happen if we become unable to work until later in life, there are many benefits to taking out a policy while young and in good health. Talk to a financial planning expert to learn more about how income protection insurance could benefit you.
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