Income Protection Insurance Considerations

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You might not be aware of it, but your most important asset in life is your ability to work and earn income. If you get stripped of this asset, have you imagined how your life will be like? Income protection insurance is designed exactly to provide that much needed financial support in the event of job loss, disability, or sickness. Before buying one, however, these are some major factors to consider.

Do you need it?

This is basically a simple question. The thing is, some of us decide to get insurance because of what we hear. However, you shouldn’€™t really listen to anyone else but yourself. Ask yourself whether you need income protection insurance. Have you thought about what would happen if you suddenly become unemployed, sick or disabled to perform your job? Can you afford to live if the paycheck suddenly stopped? If your answer to this is no, then you most probably would need income protection insurance.

How much coverage do you need?

Like most other insurances, you’€™ll have an option for either a short- term or long- term policy. Do you have present financial obligations that would end soon which you’€™ll need coverage for, like a car loan or mortgage payment? Do you have a high- risk job that frequently predisposes you to certain conditions, and thus will require long- term protection? Considering these things could help you decide about the right amount of coverage so that you can avoid under or over insuring.

Can you afford it?

Obviously, financial factor is a major consideration in buying any type of insurance. Definitely, you must be able to afford your chosen policy. It doesn’€™t make sense to buy insurance and find yourself in debt later on. So much for that peace of mind you were planning to have. If with getting insurance, you are likely to struggle with your other finances, then you might have to reconsider.

How much is your salary?

Since your income protection insurance benefits will be calculated based on your salary, you should also determine if it’€™s high enough to be worth getting a policy. Most companies only allow a certain portion of your salary- usually up to 50%- to be paid out to you. If you are not earning that much already, it might be a waste of time and money to have a policy that will pay very little to you when the need arises.

What are the exclusions?

Insurance companies limit their risk by setting up contract limitations, wherein they won’€™t have to pay claims if the client is engaged with any of the said exclusions. For example, if you have a pre- existing condition, or are engaged in a dangerous job or hobby, you might be denied insurance or pay for much higher premiums. Furthermore, if you’€™ve been found to be using drugs or alcohol, regardless if whether or not it has caused the disability or illness, your claim might be denied. Moreover, the insurance company will most definitely refuse to make payment in cases of self- inflicted injuries, disabilities from acts of war, riots, and invasions.

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We do not provide any financial advice relating to insurance or other insurance related topics. IncomeProtectionAdvisor help users get a competitive income protection insurance quote. We do this by working with FSA regulated partners who search and compare insurance policies from dozens of UK insurers. The quote you receive will be based on the information you submit to us. Our service is free and you are under no obligation to accept the quote you receive.
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