We may have all had it up to here with different “Protection” policies but here’s one that’s different; it’s worth the premium!
Perhaps it’s due to a lack of hard selling by target driven salesmen but of all the insurance policies designed to protect some aspect of our daily lives, Income Protection Insurance (IP) remains the one that not that many of us have.
It’s a little strange given that a sudden bout of illness or an accident could seriously curtail your capacity to earn a living. To make things worse some recent research highlights the fact that only 12% of employers support staff, absent due to illness or injury, for more than 12 months. In this respect, and with a nod in the direction of our strained benefits system, those relying on the good old State to see them through could be in for a rude awakening.
What do you get?
IP claims generally pay out a tax free percentage of earnings, normally 50% – 70% after an agreed deferral period. The payments can run until retirement, death or if and when you go back to work although shorter term products that pay out for a fixed minimum period are also available. Some policies also provide help to get back to work and assistance with any legal issues that might arise.
The proof is in the pay out
The numbers in respect of policies paying out are impressive. Claims figures published in 2012 indicate that Aviva paid just over 93% of IP claims whilst LV paid 88%. British Friendly and Friends Mutual paid out 97% and 98% respectively.
Don’t go it alone
Although there are clear and obvious benefits to this type of insurance cover there are also lots of options out there including ones to avoid. In addition there are a number of factors that will determine how much you pay in premiums including the type of job you do and what price base you actually opt for. Policies can come with a guaranteed premium, one that’s renewable at an agreed period or one that increases with your age.
Either way it makes sense to talk to an expert who can guide you through the options and advise you of the most appropriate product for your current and likely future circumstances.
Although you may feel invincible don’t make the mistake of waiting until that salary slip stops arriving before doing something about protecting your income.