Understanding Income Payment Protection Insurance

By: Simon Burgess

Income payment protection insurance would payout a tax-free income for between 12 and 24 months if you should lose your own income. A loss of income could occur if you were to become unemployed through no fault brought about by yourself, such as being made redundant. A loss of income could also come about if you fell ill and you were unable to work many weeks or months. You could also lose your income if you were to have an accident which caused you to remain out of work for a period of time. If you lose your income then you will be faced with stress and anxiety just thinking about where to find the money to continue living your lifestyle. A policy can put a stop to this.

Income payment protection insurance should not be confused with income protection insurance which is a totally different product. Income protection insurance would payout up to the age of retirement and only covers accident or sickness. Income payment protection insurance on the other hand is a short term insurance to guard against you unemployment and incapacity. It would begin payout after certain of time of being unemployed or incapacitated. Usually this is between days thirty and ninety and some providers would backdate their protection to the first date of being unable to work or of becoming unemployed. The policy would then pay a fixed sum, which was determined when applying for the cover. Policies from some providers will continue paying for twelve months while other policies from providers could last up to twenty four months. Once this period of time has been reached then your policy will expire.

It is important to shop around when looking for cover for your income as premiums will vary greatly between providers. Buying from a standalone specialist provider is always the best way to get the cheapest quote along with the information and advice needed to enable you to tell if a policy would be right for your needs. When considering a policy you should always compare the terms and conditions as this will tell you about the exclusions and also the beginning and ending dates.

Income payment protection insurance can be a lifeline if you find yourself unemployed or you had to take time off due to accident or illness. Without a policy and you would have to make many changes to your current lifestyle. When it came to paying bills you might have to decide which to pay and which to juggle. Of course you would have to be able to maintain your mortgage and your loan repayments. If you do not and you fall behind then you would be risking losing your home.

If you fall behind on your loan repayments then you would at the least earn yourself a bad credit score and possible a County Court Judgement. Of course there are also your everyday bills to maintain, grocery bills, heating and lighting bills, which would all have to be paid. You could do all by taking out protection. This would allow you to get on with finding work again without distraction or to make a recovery from illness and get back to work.

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