Income Payment Protection Insurance
Would it surprise you to discover that four out of five people in the UK do not have Income Payment Protection Insurance? Many consumers are wary when it comes to paying out for a monthly premium; however this could be one of the most important decisions you make.
It isn’t surprising that some people are hesitant when considering income payment protection insurance (PPI). There have been stories in the media about customers being sold PPI improperly - without explaining what is and what isn’t covered, for example.
What is Income Payment Protection Insurance?
Income Payment Protection Insurance, sometimes known as Payment Protection Insurance - (often referred to simply as PPI) - is a policy that pays you tax-free monthly payments if you lose your income due to redundancy, accident or sickness. This policy is also known as Accident, Sickness and Unemployment (ASU) cover.
There are state benefits to help you, but the coalition government have announced changes to how they assess customers. A Work Capability assessment will decide whether you receive the benefit and what type of work you will be able to undertake.
Over 1 million claims are turned down each year for incapacity benefit - this is likely to increase when the new measures for assessment are introduced in 2011.
With Income Payment Protection Insurance there is no need to worry about whether you are eligible. So, if the unexpected happens - a car accident or sudden illness, for example - you can be assured that Income Payment Protection Insurance will cover not only your mortgage repayments, but even council tax and utility bills.
How you pay
Your monthly premiums (what you pay for the policy) will depend on several factors. Firstly, your choice of waiting period (the length of time you’ve chosen to wait until your money is paid out). For lower monthly premiums you will need to choose a longer waiting period.
The older you are, the more expensive the plan will be. As you get older, the likelihood of getting an illness increases. Your gender can also have an effect on the plan premiums. Women will usually pay more than men as there is more chance of a woman falling ill than a man.
If you have a dangerous job, then you will usually pay more for your insurance too. This will also apply if you have dangerous or extreme hobbies or pastimes.
If you suffer from poor health, then your Income Payment Protection Insurance will be higher as there is a much higher chance of you falling ill in the future.
However, income payment protection insurance isn’t always for everyone. If you are self-employed or a contract worker, you need to check the policy for exclusions. Also, you will be unlikely to claim for unemployment insurance straight away - typically you will need to wait for around 120 days, depending on the policy.
You will be exempt from making a claim on an existing medical condition - so your Income Payment Protection Insurance won’t pay out that bad back that has been around for years...
If you do make a claim for sickness or unemployment cover, will be need to have been off work for a minimum period, usually around 30 days.
Choosing the right Income Protection Plan
You will probably be overwhelmed with the number of providers of Income Payment Protection Insurance, so it is important that you find the right plan that suits your needs. There are some companies that specialise in certain occupations - for example, doctors, teachers and nurses. Others cater specifically for those in the manual labour industry. It is worth searching the internet to find any specialist income protection providers that understand your profession - they will be able to point you to the plans who will offer the best cover for the best price.
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