Income Payment Protection in the UK
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Income Payment Protection Insurance - Life is full of highs and lows. But the lows can be mitigated if you cover yourself against their excesses. You and your family need security. But what happens if you can't work anymore? What happens if you suffered an injury or an illness bad enough that you are not earning any income for a long period of time? Would it not be a good idea to protect you and your family so you can be safe should the worst happen? Whatever happens, you still need to be able to afford life's basics. A home, a car, and you're not out of order to wish to have a few luxuries - such as maybe an annual holiday.

This is where income payment protection comes to your aid. If you can't go to work due to illness or an injury, and it will take some months to recover, or worse you can't work again, you still to be able to buy food, pay your mortgages and send your kids to school.

Some people seem to underestimate the importance of income protection. They would much rather spend money on insuring their car, which is likely to be worth only about £10000, or spending money on insuring their home, which tends to be worth on average about £150000.Life insurance covers you for around £200000 as well. This is often put ahead of insuring their income. Your income could total, over about 40 years of work, including inflation, about £2 million, is that not important? Should you be 35 years old, you are over 10 times more likely to get disabled than to die.

What income payment protection does is to protect your earning ability. For a limited period your income payment protection will pay you up to 75% of your net income. This limited period can be specified (ie. for 12 or 24 months). Or it could be until you are a certain age (65 perhaps). Whatever the period, if you get better and can go back to work, your payments will stop. There are many variations of these policies, so you should take time to understand the different types.

One area where there are differences is the definition of what a disability actually is. Is it not being able to perform a specific occupation (i.e. you are a physiotherapists but your hand is broken so you can't use them) or that you can't work at all. Some insurers use an income based description of disability, where they will payout if you can't produce a certain percentage of your previous income due to your sickness or injury. Others use a duties based description, where they'll pay out if you can't do an important duty of your occupation.

 

 

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