Income protection insurance

One of the most valuable resources for protection your financial stability is income protection insurance. An income protection insurance policy ensures that you and your family have the financial coverage you require to maintain your standard of living in the event of an illness or injury that leaves you unable to work for a period of time. The tax-free benefits of your policy can help you keep up with the costs of food, housing and other vital needs until you’re fit to return to work.

Income protection insurance, or IPI, fills an important need for working adults to maintain an adequate income in spite of illness or disability. While state-funded protection benefits may replace a percentage of your lost salary, these funds typically do not cover the realistic cost of supporting a spouse and children. Income protection insurance gives you the supplemental funds you need to live comfortably during an extended absence from your job.

Benefits and Limitations of Protection

In exchange for your premiums, income protection insurance provides tax-free income for a period of time stated in your contract. If you become unable to earn an income because of an illness or injury, IPI pays out benefits monthly or weekly to cover your living expenses until you are able to return to your job, or until the end of your coverage period. If you retire or pass away during the course of your coverage, benefits to you and your family must be replaced by your pension or other retirement funds, or by life insurance benefits.

IPI coverage

The tax-free status of IPI coverage means that you are not subject to normal income taxes. However, your premium payments do not qualify for tax relief, and tax relief from other benefits may be reduced or eliminated whilst you are receiving insurance benefits. If you are covered by IPI through your employer, your employer’s payments for your policy may be claimed as a business expense. This tax benefit may encourage employers to consider offering IPI protection as a benefit of employment.

Income protection benefits are only payable to policy holders who have become unemployed due to an illness, accident or disabling injury. These insurance policies do not cover job loss due to a voluntary resignation, termination or a lay off. Before you purchase a policy, review the list of exclusions carefully so that you are aware of any restrictions on your cover. For instance, many policies exclude income loss due to drug or alcohol abuse, self-inflicted injury, pregnancy, war or criminal activities.

The length of time that you may continue to receive benefits is restricted by your insurance policy. This limit ensures that you have the motivation to resume work once you’re fit to return to your job. If you change careers in the interim, your benefits may be reduced, modified or eliminated, depending upon the risk level of your new profession. While you’re unable to earn your current salary, IPI allows you to fulfill your obligations to your mortgage lender and other creditors, as well as meeting your household’s basic needs.

Income Protection Insurance Rates

In general, IPI is an affordable form of salary protection for healthy adults. Your age, the risk level of your occupation and hobbies, your health status and lifestyle factors such as tobacco and alcohol use may affect your insurance rates. If you have existing health concerns, such as heart disease or diabetes, you may have higher rates or be denied protection by some insurance companies.

The deferred period, or the length of time between the loss of unemployment and the pay out of your benefits, may affect your rates, as well. As the insured, you have the ability to decide how long you can afford to wait before you begin to receive your weekly or monthly payments. When you consider income protection insurance, consider how long your current savings would last, or how much financial coverage your state-funded benefits would provide before you would require IPI benefits to maintain your standard of living.

Comparing quotes for income protection insurance is fast and convenient when you search for affordable cover online. Compare quotes from multiple providers to find coverage within your price range. The cover you receive may make the difference between whether you can meet your financial obligations as you recover from a disabling illness or accidental loss of physical function.

Income protection insurance gives you and your loved ones greater peace of mind, knowing that you have the resources to cope with a financial crisis. An accidental injury or illness can strike any healthy adult. With IPI, you can rest assured that you will be able to provide for your family and maintain the costs of your household in the event of a disabling injury or a sudden decline in your health status.

Income Is a Great Fit For Freelance Professionals and Beyond

When you’re healthy and you can work, the last thing that you might be thinking about is income protection. However, one the chief purposes of insurance of all stripes is to help you in those times where you just have to react. Emergencies come up. Things happen, and they’re not always good things. So when you’re sick and you can’t work, you might wonder what’s really going to happen to you. If you don’t have a lot of savings you might find it hard to really make ends meet. Can you get things done with government assistance? Sure, but you really won’t get that much, and you may have a lot of expenses that far surpass the level of assistance that you would get.

There’s no time like the present to reassess where you stand with the entire process. Life insurance is designed to take care of your loved ones if you pass away, but what’s going to be there to take care of your family when you get sick.

There are many different income protection schemes that can help you get most of your salary paid out still if you become ill. This coupled with a few financial workarounds can help you get through some of the darker times and back onto a good pattern.

Are you really ready to get things started? Will you look into income protections products that can shield you from the worst of illness while still protecting your family?

Great! One of the top things that you will need to do is try to see if your employer already offers something like this. They can usually get a better plan cost than you can since they have much more volume, but this doesn’t mean that you won’t receive quality protection.

At this point, it’s about looking around and asking questions. Just because you might be interested in learning more about income protection doesn’t mean that you don’t want to explore your options before rushing into anything.

Reading the fine print on these income protection plans is a good thing. You always want to know where you stand at all times. If you don’t know this information, then you will want to talk to the plan administrator for more information. Either way, the truth is out there — will you check it out for yourself?

What is income protection insurance?

None of us typically like to think much about what might happen if we were taken ill, suffered an accident or were made redundant.

These are not pleasant subjects; particularly in terms of the effect they may have on our ability to generate income for our families and ourselves.

Yet as responsible individuals, we may feel that we have a duty to consider the implications of suddenly losing our income – and those implications may be grave.

The mortgage

State aid may prove to be very limited and however initially sympathetic our mortgage lenders may be, their patience may become exhausted and suddenly talk would move to repossession.


The modern household typically has more debts than simply the mortgage and similar problems may begin to arise with things such as car repayments, credit card bills, the utilities and bank loans/HP etc.

The insurance options

Payment protection insurance exists to help us cope with a sudden loss of income on a short to medium term basis.

It can be directed towards a range of specified bills, including the mortgage, to ensure that these are kept up to date during the period we are trying to find alternative income.

The conditions covered by this type of policy typically include sickness, accidents and compulsory redundancy.

Income protection cover insurance provides an alternative to cope with what might be described as potentially more serious situations.

That might include scenarios where you were hit by severe ill health and the prospect that this would continue into the indefinite future. In such a situation, this type of policy would payout a monthly income to you on an indefinite basis (to your normal retirement age).

These are two powerful types of insurance cover that may offer you reassurance and peace of mind.

Some points to note

Redundancy is typically not included as something covered by income protection insurance.

It is also worth noting that there are some situations under which you may lose your income for reasons of your own decision. Examples of that might include dismissals, resignations and career breaks etc. In such circumstances, payment protection insurance may typically not apply.

Is insurance worthwhile?

This is always one of those difficult questions to answer and ultimately each individual must make up their own mind.

It is sometimes said that no insurance of any type is ever worthwhile – up until the point you need to make claim!

In fact, it might be argued that the slightly tongue in cheek sentiment expressed there is missing the point because one of the key benefits of this type of cover is the fact that it provides you and those around you with a degree of comfort and security.

It might be very difficult to put a price on how much that is worth to you.