How to decide whether to take out income protection insurance

Taking out income protection policy when you start a job or during your employment may not seem very important because not one ever envisages that they suffer a work place injury.

What is income protection?

A full and comprehensive income protection policy (or payment protection policy) is an agreement with an insurance firm to provide financial help in the event an employee suffers industrial or workplace injury that causes disability or leaves the victim in a state not fit to work.

Who can take out income protection insurance

Insurance providers accept most employees that do jobs that are not a threat to their health and well-being. Although they will also accept people doing jobs that are by nature more dangerous and may pose some degree of risk to an employee, the premiums charged would be significantly higher to compensate for the higher risk associated with the job.

What does a policy entitle

In most cases, a policy will pay money to cover the non-payment of the salary the injured person would be earning were they still at work – usually on a monthly basis. The payments are usually comparable to the salary paid out on the job; however, the percentage of the salary paid will also depend on the premium paid before the injury and the policies you agreed to when signing for income insurance.

How long does the policy last

A payment protection policy (PPI) typically lasts for 12 months, but the length of term can differ in some cases. Some providers are known to provide coverage for longer, or until the victim has full recuperated from an injury. In most cases, income protection for a redundancy period of 12 months is enough, though.

How does the process work?

When you fill your claim for income protection insurance, you will, of course, need to state the job and the type of responsibility it endows. From here, the insurance providers will asses the risk worthiness and determine the premium.

Finding income protection quotes

You can buy income protection online through the website of an insurance provider. You can also obtain a quote from different providers to help you assess the prices charged by different insurance brokers.

High-risk jobs

Those people with jobs that are more risky and have an increased probability of causing injury will either be offered insurance at a far higher premium or not offered one at all.

Self employed and contract workers

People that run their own small business or work on very short-term contracts should assess their case to see if payment protection insurance is appropriate in their case.

What to look out for in your policy agreement

• Choose your payment protection insurance provider very carefully. They differ significantly in their policies and the premiums they charge. For example, in most cases, a provider will only provide coverage for 12 months of unemployment should you get injured and are unable to work as a result of sustaining the injury.

• Be very clear on the terms of the agreement. It is easy to overlook the exact conditions that are required to be met for a payout. If you are not careful, you could end up paying monthly amounts without actually having the right protection, or paying unnecessarily high premiums.

• Read the small print over and over again until you are clear about their terms and conditions. If you are not clear on something, clarify it with them before you sign on the dotted line.