Tips on Income Payment Protection Insurance

Although it is one of the most flexible payment protection products available, there are still one or two tips to buying income payment protection insurance to ensure that you get the cover you need.

How much cover?

Income payment protection insurance is designed to pay you a proportion of your normal salary if you are unable to work because of an accident or sickness or if you become involuntarily unemployed. What is more – and one of the great beauties of this insurance product – is that you can choose just what level of protection you feel you might need.

A good idea is to list all your monthly expenses and to rank them in order of importance – those given highest priority will be the ones you simply cannot afford to miss, such as the rent or mortgage; those towards the bottom of the list would be those you could afford to delay temporarily or to drop altogether if you had to stop working because of an accident or sickness or during a period of unemployment.

Once you have calculated what level of replacement income you would be likely to need, then it is simply a question of buying the appropriate amount of insurance cover. The price of premiums is generally quoted per £100 of income covered, so it will be easy to see how much you will be paying in monthly premiums.

All policies will have an upper ceiling on the maximum amount of income that can be covered in this way; typically, that amount is 50% of your normal gross salary or £1,000, whichever is the lesser amount.

Where to buy it

Premiums for income payment protection insurance can vary quite widely, so it is a good idea to take full advantage of the keen competition within this particular sector of the market. As a general rule, you should find that one of the many independent insurance providers will offer more attractive rates – and often as not a better quality product – than the high street banks, for example, whose principal business of course is lending money rather than selling insurance.

Claims

The real test of any insurance, of course, comes when you need to make a claim under the policy. Although it is difficult to judge how smoothly and efficiently your claim might be handled in advance of making it, there are nevertheless a number of tips to choosing a product that makes the claims process as seamless as possible.

For example, all policies will have a “qualifying period” that sets out the minimum period during which you need to be incapacitated from working or unemployed. Typically, this is 30 days, though some policies will stipulate 60 days. Clearly, if you want the benefits to be payable sooner rather than later, you should select a policy with the shorter qualifying period.

Furthermore, some policies will then treat this qualifying period as an effective “excess” on the cover, and you would need to bear any loss of income during that time yourself. Other policies, however, will backdate the payment of policy benefits (i.e. your replacement income) to the first day that you were incapacitated or unemployed.

Why Buy from British Insurance

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