No one likes the thought of being abruptly ejected from work. Unfortunately though, this can and does happen. Every year, countless people find themselves out of work, due to circumstances completely out of their control. This is a scary thought, and the reason for income protection insurance. However, it doesn’t mean you should rush out and buy a policy straight away! Here are some things to consider when looking at income protection.
So, what is income protection insurance? In short, it’s a long-term policy intended to help you if you can’t work due to an illness or injury. If you make a successful claim, it will supplement part of the income you’re losing due to your condition. It will pay out until you can start working again, you retire, or end the policy term in another way. Before deciding if this insurance is right for you, you should know that there’s a waiting period before pay-outs start. When buying the policy, you generally set up payments to start after sick pay ends, or another policy ceases to cover you. One good thing about this kind of insurance is that there’s less nitty-gritty details to study. Policies will cover almost any illness which means that you’re unable to work, both in the short term and long term. It differs from critical illness insurance in that it pays out in several installments, rather than one lump sum. You can find a more complete guide at http://www.financialadvice.net/income_protection_explained/.
So, do you need it? This is a bit of a tough one, and all depends on your personal circumstances. There’s a simple, general rule to follow though. If an illness means that you wouldn’t be able to pay your bills, then you should certainly consider income protection. Income protection is something of a given in a few different professions. Mainly, these are self-employed jobs, or professions which are a little unstable. Professional athletes are one of the more unusual groups who need it, as seen here: www.claybrooke.org.uk/income-protection-insurance/rugby-players/. Not having insurance when a disaster strikes can feel terrible. However, I’m sure you don’t want to waste money on a policy you don’t need too!
If you know you’ll have a lot of sick pay to lean on, then income protection is probably a waste of money. If your employee benefits include 12 months of sick pay or more, then you don’t need to worry about it. If you have family and friends whom you can rely on for financial support, then this is another reason to avoid taking out a policy. If you’re getting on, and you can afford to retire early, then this is another good substitute for income protection. Even having a lot in savings can make these policies a waste. Remember though, you won’t always know how long they’ll have to see you through.
There you have the main points of employment protection insurance. I hope that this little introduction has given you a much clearer picture. I also hope that you never need to claim on this kind of policy!