Income Protection Insurance

Income Protection Insurance Online

Income Protection Insurance is also named Permanent Health Insurance, which is abbreviated to PHI. They are the same thing, so don't worry about what you are buying between the two. If you are afflicted by an illness or are part of an accident or suffer some form of disability, this form or insurance will cover your income. Whatever the name for it, it is still a guarantee of cashflow protection, which you get if you pay a premium over a certain period.

Missing work through illness for a long period is not as rare as you might think it is. Actuaries have calculated that every person at the average working age has a one in five chance of not being able to go to work due to illness for at least a period of three months. To some people, this may not matter, as they reckon that sick pay from their employer will cover them for that period. However, look closely at your contract and you may see that sick pay from your employer only covers you for a small period, and then they only have to pay you statutory sick pay, which is only £57.50.

Should you be self-employed, you can claim State Incapacity benefit, but that is only £48.80 per week. Thus, should you be a father of two earning £50,000 per year, you might see your income fall over 80% to around £7000 per year. So you can see why income protection insurance is vital.

Many people say that they see income protection insurance as quite expensive, because premiums are an amount per £100 of monthly income. The amount of your premiums depends on such criteria as health and age. But, even if your premiums are quite high, you'll find that most influential advice will suggest that it is perhaps one of the most important insurances.

Some people think that critical illness policies will cover them for illnesses that stop them working, but this is because most people don't understand what critical illness policies are and what they cover and what is restricted. Critical illness will only cover you for certain specified illnesses and even for them only for certain treatments.

But income protection insurance is much simpler. Should you not be able to work and have paid your premiums you are covered. This is borne out by a Which? magazine survey that found that for each critical illness payout there are three income protection payouts.

As far as tax is concerned, your payouts are tax-free should you have paid your premiums individually, but not if income protection insurance has been provided by a company scheme. Should you extend the "deferment" period between the insurable event occurring and payout then you can cut your premiums.

 

 

 

 

© AskFinancially.com 2008

Income Protection Insurance

Ask About


> Income Protection Insurance
> Group Income Protection
> Income Payment Protection
> Income Protection Plan
> Income Protection Policy