What to Think About Before Taking Out Income Protection Insurance?

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If you’re worried about how you’ll be able to get by if you get sick or disabled and unable to work, you might want to consider getting income protection insurance. This type of illness insurance will replace part of your lost earnings. As attractive as it may seem though, there are a few things you need to remember before taking out an IPI policy.

Check if you really need income protection

Before taking out IPI policy, check if you already have income protection through work, because many employers may offer this as part of your employment benefits. Also check if you have other type of illness insurance combined with your mortgage or life insurance, that should have you covered during times of serious illness. Lastly, check if you have adequate savings which you can use instead of taking an insurance policy.

Determine if this is the best type of illness insurance for you

There are other types of illness insurance that could better suit you. If you’re worried about IPI being expensive, you could explore other options, such as critical illness, which can be cheaper. Keep in mind though that the conditions covered will be limited, and your cover may last for a shorter time than that of IPI.

Check if you can afford the cost

IPI can be a bit costly, and there’s no guarantee that you’ll ever use it, so make sure you understand this risk before taking out a policy. furthermore, missing premium payments can get your claim denied or lose your policy altogether.

Check for exclusions

Bear in mind that illness insurances do not always cover all types of diseases and conditions. As a rule of thumb, you won’t be covered for preexisting conditions, or those conditions which you’ve acquired before taking out a policy, or any condition you’ve sought treatment or consultation before. Some policies also do not cover diseases that run in your family, and even if some are willing to do so, you may have to pay extra for this.

You also need to find out how you’re going to be paid if you’re unable to work. Depending on the policy, you may be paid for as long as you aren’t able to do your own job, but some policies may only make payments if you aren’t able to perform any other kind of paid job.

Check how much you’ll receive if you are to make a claim

In the event of a successful claim, make sure you know exactly how much you’ll be getting, because your payment amount may be reduced if you are receiving other income such as benefits from state or other insurance policies.

Check how long you’ll have to wait before the policy pays out after a successful claim

Generally, policies require a minimum of four weeks deferred period or waiting period before you can start receiving benefits after you’ve stopped working. This can last up to two years, depending on your policy. If you choose to wait longer before you are able to make a claim, your premiums will be cheaper.

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