Income protection insurance is a unique financial tool that protects all who rely on employment for their income to protect themselves against unexpected absences and loss of earnings. It provides a relieving safety net that ensures critical financial assistance, providing the criteria are met. This article examines income protection insurance, how it works, and how best to acquire it.
What Is Income Protection Insurance?
As the name suggests, income protection insurance protects and replaces your standard income if it becomes unavailable for any reasons covered by the policy’s conditions. These instances tend toward sickness or injury, but other scenarios are also eligible for a claim.
Eligibility For Income Protection Insurance
As with all insurance types, there are specific eligibility requirements to be met for applicants to be provided income protection insurance, including:
- Citizenship/permanent residency
- ‘Gainful’ employment/self-employment. Policyholders must typically work at least 20-30 hours per week, depending on the nature of the job. The employment must be deemed legitimate and provide consistent income.
- Between 18 and 59 years of age—Considered the industry-standard age restrictions, these numbers apply in most cases. However, applicants employed in high-risk environments may need to accept tailored conditions and additional premiums.
Exemptions From Income Protection Insurance
As we might expect, income protection insurance policies do not cover lost income in all circumstances, and there are some notable exceptions, namely:
- Pregnancy, childbirth, and related health issues
Any periods of absence from work due to pregnancy, childbirth, maternity leave or associated health issues are not covered by standard income protection insurance policies.
- Acts of War
It is an unlikely caveat to come into play, but one mentioned in most policies.
- Criminal Behaviour
If policyholders experience absence from work due to any type of criminal activity and its after-effects, no income protection insurance policy will provide cover. This includes any injuries sustained through these actions or incarceration periods.
- Suspension
Among the most significant caveats, this states that periods of suspension from employment will not be remunerated under any circumstances. If the holder contests the suspension as unfair, the policy is still not eligible for a claim.
- Self-harm
Income protection insurance policies do not cover incidents of self-harming that cause absence from work and lost income.
Sourcing The Right Income Protection Insurance Policies
Some helpful tips to bear in mind when researching any income protection insurance policy include:
- Compare available policies side-by-side using reputable comparison sites. Scrutinize the details and note any differences.
- Speak with potential providers directly. Aside from addressing any concerns and issues, you may be offered spot discounts to tempt you. This is also an excellent opportunity to engage with the people handling any future claim and assess their professionalism and customer service.
- Seek advice from a professional insurance broker if the process is overwhelming and confusing.
Is Income Protection Insurance Worth Having?
The protection and peace of mind that income protection insurance offers mean it is undoubtedly worth having. We must each determine whether the premiums are within our budget and how adversely we would be affected by a sudden loss of income. If the inconvenience and financial implications would be potentially ruinous, income protection insurance offers comprehensive financial support to mitigate the risk and provide peace of mind.
