Illness or accidental injury can strike any of us at any time. Usually, it proves to be something we get over quickly enough and return to work. But there are times, also, when the sickness proves rather more obstinate, or the injuries longer to repair, and we are forced to take several months or so off work. An enforced lay-off can also arise from involuntary redundancy. At times such as these – with a regular income under threat or non-existent – income payment protection insurance may prove an extremely valuable financial lifesaver.
The principle is straight forward: in the event of you being incapacitated for work or involuntarily unemployed, income payment protection insurance pays a regular, monthly, replacement income, up to set limits.
The amount of income to be paid as a benefit under the policy is determined by you at the outset. There is a limit to the level of income that can be insured in this way and most policies set the maximum at a percentage of your normal income when in work. As with other forms of payment protection insurance, income protection benefits will generally be payable for up to a maximum of 12 months. Longer periods may be available under some policies, up to 24 months.
Income payment protection insurance therefore may provide a flexible form of cover against a loss of income through incapacity or unemployment. In either of these events, the replacement monthly “income” can be used to help meet any number of bills and expenses – from help with mortgage repayments, rent, utilities, loan repayments or a whole host of normal, ongoing domestic expenditure. Income payment protection insurance, therefore, may make all the difference between managing to keep your head above water and slipping into an impossible spiral of ever-increasing debt – the very last thing you would need when you do get well enough to return to work after a bout of sickness or when starting a new job.