Income protection is one of those ‘ought to be’ things. You may have seen ads for it in the yellow pages or on TV, but have you considered taking out income protection for yourself? If you’re working, you need to consider getting this as soon as you can. If you’re not, you could be paying for it as part of your bills in a year or two. In either case, it could save you hundreds or thousands of pounds in worse cases where you become seriously ill or injured.
Income protection basically pays out a steady regular income replacement, usually as a supplement to your regular income, if you’re unable to work due to illness or an accident. It allows you to cover the mortgage, plus the day-to-day expenses of life, such as food and clothing. If you were employed and became seriously ill or disabled, you would usually have to find some other way to ensure that you can keep up with the payments, but this isn’t the case when you have income protection. You are allowed to continue repaying your benefits for a specified period of time, usually of twelve months.
How long does the deferred period last? There’s typically a deferral period of three months, meaning you can claim income protection insurance for a certain period before your benefits run out. This can be used to reduce the amount of payments that you have to make. However, your protection insurance will not kick in immediately once your deferral period has expired.
How do I claim when my benefits run out? Once you’ve finished your specified deferral period and can no longer claim for income protection work related benefits, you can generally stop making claims for these benefits. This means that you’ll need to take a look at what your policy says about how you can claim your benefits if you fall out of work for a specified period of time. The specific details will vary from company to company, so it is wise to check with the benefit provider you’re using.
Do I have to keep paying for my life insurance premiums? Generally speaking, absolutely not. Once your deferred period has expired, your insurer will pay for you to die, so no matter how old you are, there is no need to pay any more income protection premiums. Of course, this might raise a few questions about why you’re still paying for them, but this is the risk that insurers take – they don’t know when you might end up needing to claim.
Can my dependent’s claim income protection pay out for me? This depends on a number of factors. The age of the dependent is one, as is their earnings and/or age. If they’re over the age of 65, they may also qualify for income support through their spouse’s work. Likewise, if one of the dependent’s owns their own home, they may be able to claim a lump sum payment out of their mortgage for the duration of their income protection policy. However, this can only happen in the first few years of the policy, and then it is no longer available.
How do I find out how much income protection policies pay out? There are a number of ways to get this information. Some methods are better than others, though. The easiest way is to visit the website of your insurer – they should have details of how their policies work, along with details of what the payments due for each month are.
How do you apply for income support? Applying online is the easiest way. You can either fill in an application form on their website or collect various forms from other insurance companies. After you’ve collected the forms, read through them to make sure you understand how they work. Then, complete them and return them together with a signed application form. Be sure to also include any relevant medical information.