What is Income protection Insurance?

An income Protection Insurance policy (IPI) provides income to replace earned income should an individual be unable to work due to an accident or illness.  

Individuals select the level of income they would require if they were unable to work through either accident or sickness.  They then pay monthly premiums to an insurance company such that if one of these circumstances were to occur, they would receive the income specified.

The maximum income is usually restricted to around 65% of salary (depending on the company chosen) as an in-built incentive for individuals to return to work when they are fit.  It is not the purpose of IPI to make it as lucrative for individuals to remain at home as it is to work.

Individuals choose when they want to receive benefits in the event of a claim.  Generally, there is a waiting or deferred period before benefits are paid – for example, 4 weeks, rising to 8,13,26,52 weeks, or event longer in some situations.  It is possible, however, to obtain income protection cover with no deferred period and this is useful for self-employed people or those with no employer benefits.  

The longer the deferred period the lower the premiums.  Deferred periods can be chosen to dovetail with any cover provided by an employer.  The sum assured can be increased, thereby ensuring that the benefits paid on a claim have risen to reflect the increased salary and lifestyle needs of the individual.

Policyholders have an option to escalate benefits during a claim to keep them In line with inflation.  Premium rates may be slightly higher to reflect this option, which must be decided upon at the outset.

To speak to one of our fully qualified independent financial advisers now either phone 0871 433 3700 or click the contact section on the bottom of this page and someone will speak to you straight away to help you with your life assurance choices.