Protecting your family’s income in the event that misfortune strikes, is something that is a top priority for many. Here, some frequently asked questions are explored.
What is income protection cover and who sells it?
The term income insurance is used for many variants of this type of cover, so choosing the most suitable one without exactly knowing what you are looking for, may be daunting.
The good news is that there are specialists such as Drewberry Income Protection, who offer income insurance policies along with expert help and advice, to ensure that you get the most appropriate cover for your needs.
The exact nature of the cover provided and its suitability for your circumstances is something that you can only ascertain by speaking with such providers and reading your policy carefully in advance.
In principle though, such cover exists in order to provide you with a guaranteed monthly income under specified conditions.
They might include things such as accidents or ill health that prevent you from working. It might also be possible, in some cases, to include a degree of cover for unemployment through compulsory redundancy etc.
How long would such policies provide me with an income?
Once again, that typically depends upon the type of policy you have selected and paid for.
As a general rule, unemployment protection might be available as an optional extra that typically would only provide you with an income for a limited period of time – perhaps over 12 months while you sought alternative employment.
In the case of policies covering accident and illness, it may be possible to select cover over periods ranging from 12 months to several years potentially up to your eventual normal retirement date.
What sums would I receive each month?
There will typically be a relationship between the monthly income generated by your policy following a successful claim and the level of cover you had selected and paid for up until that point in time.
Many providers use a ceiling that will relate the maximum sum payable each month to a specified percentage of your previous normal earnings. So, you may be able to receive a maximum sum each month roughly the equivalent of perhaps as much as 50-70% of your previous earnings (upper limits may apply).
Would the monies be paid to me each month or to people I owe money to?
Typically, the money is paid to you as a policyholder and you may then do with it as you wish.
This is one of the differences between income protection cover and some forms of mortgage insurance.
In the case of specific mortgage cover, some policies may pay your monthly mortgage amount directly to your mortgage provider rather than to you.
Do the policies cover all medical-risks?
That might be unlikely to be the case.
More commonly, policies might either specify a very substantial list of conditions covered or in some cases, they may exclude certain conditions and circumstances – or possibly both.
Whatever approaches a policy adopts, if you make a claim you would understandably typically have to support your position by providing appropriate medical evidence certifying that you are unable to work.