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In a world where we are constantly told we need to spend money and avail ourselves of things we don’t want or need, it’s nice to note that a few exceptions still exist. Income protection insurance is one of those rare commodities that anyone relying on a working income should consider. It has made a real difference to the countless thousands of people who have been unfortunate enough to need it.
How income protection insurance works
In its most basic terms, an income protection insurance policy replaces the income you usually receive from working if you cannot do so. The reasons for the inability to work covered by the policy will typically revolve around injuries or sickness, and official medical reports confirming this status are required to make a claim.
Eligibility
Applicants must be:
- Aged 18-59—These age restrictions typically apply; however, those engaged in specific ‘high-risk- occupations may find even tighter restrictions.
- Citizenship/permanent residence
- Employment or self-employment of no less than 20-30 hours per week (depending on the nature of the employment)
Exclusions
The following conditions are unlikely to be covered by any standard income protection insurance policy:
- Suspension
No matter the reason and whether the suspension is temporary or not, no income protection insurance policy will cover this period of inactivity.
- Pregnancy
A typical income protection insurance policy does not cover maternity leave or time off attributed to pregnancy, such as absence due to morning sickness.
- Self-harm
No income protection insurance policy will cover self-inflicted injuries.
- Criminality
Policyholders who are injured in the course of criminal activity are not eligible for remuneration during any subsequent period of absence. This applies to recovering from injury or being incarcerated.
- Acts of war
It is an unlikely caveat to come into play, but one that exists nonetheless.
Recommend steps when researching income protection insurance policies
- Carefully review any quote for coverage, paying particular attention to the associated fine print.
- When using comparison sites to review policies side by side, note even the most negligible differences and list them separately for convenience later. Eliminating unwanted policies will be more straightforward if you have performed this note-taking as you worked through the process.
- Contact your shortlisted insurance providers and ask any questions that have occurred to you during your research. Assess the level of customer service you receive, and remember that these are the same people you will have to deal with if you need to make a claim. Lack of clarity and obtuse behaviour may be frustrating and unhelpful now but will be a thousand times worse if you need assistance.
- Keep all documents and details about each policy in good order to simplify things if you need to refer to them later.
Conclusion: Is income protection insurance worth the premiums?
Unequivocally, income protection insurance is worth having if you can afford the premiums, are not excluded for any reason and are duly accepted. None of us knows what the future holds, but we know that life will take a very unpleasant turn if we suddenly find ourselves without income and too sick or injured to raise finances. Income protection insurance takes that worry out of the equation, and peace of mind is something so many of us wish we could have more of.
More by Alan Watts
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