Income Protection Insurance: An Unrivalled Safety Net

We've all heard the quote that we should 'Hope for the best, but prepare for the worst', and these are fine words to live by. All of us who rely on our employment to provide income could find ourselves in a nightmare scenario where we lose it unexpectedly. Luckily, with income protection insurance, we can protect ourselves against the times when things don't go according to plan. Having a safety net in place can be a great relief, and peace of mind knowing we have essential financial assistance in place is a powerful thing. 

What is income protection insurance?

As the name suggests, income protection insurance is a policy that protects your regular income and replaces it if it becomes unavailable for any of the reasons specified in the terms of the policy. These are typically related to sickness or injuries but are not restricted to those, and some strict exemptions we will examine later are in place.   

Eligibility for income protection insurance

Standard eligibility requirements for income protection insurance insist that applicants be:

• Legal permanent residents or naturalised citizens

• Employed or self-employed for at least 20-30 hours per week (depending on the employment). Positions must be legitimate and typically provide a regular, predictable income that the applicants need to maintain their living standards. 

• Between 18 and 59 years of age 

Although industry standards dictate these terms, some applicants may face additional costs and restrictions if their occupations are deemed hazardous.

Restrictions in income protection insurance 

A typical income protection insurance policy will not be eligible for a claim if the following are contributing factors: 

• Pregnancy and maternity

Any employment absences related to pregnancy and associated health issues are ineligible for coverage. 

• Crime

No remuneration will be provided if the policyholder loses income due to their criminal behaviour. This includes absences from work for crime-related injuries or periods of incarceration. 

• Self-harm

Incidents of self-harm that cause a loss of income are unprotected. 

• Suspension from work

No matter the reason, a standard income protection insurance policy will not cover any period of suspension from duties. This rule applies at all times, even if the suspension is contested. 

• Acts of war 

However unlikely, this restriction is in place. 

Researching income protection insurance 

When researching income protection insurance policies, the following tips are recommended:

• Pay close attention to the terms and conditions of each policy, using the 'side-by-side' feature of comparison sites if available. Note the differences separately for later. 

• Speak with your shortlisted providers on the phone. Although the internet can provide rapid, detailed quotes, you may wish to clarify some aspects. There is also a decent chance they will offer on-the-spot incentives and discounts unavailable online. This conversation also represents a chance to interact with the people handling a claim if you need to make one, and you can assess their professionalism and customer service beforehand. 

• Always consider engaging professional advice from an experienced insurance broker who can provide additional information, tips, and advice. 

Income protection insurance: Conclusion

Income protection insurance is a fantastic option that provides peace of mind when not needed and excellent financial support if you, unfortunately, need to make a claim. It is a superb financial tool if the premiums are within your budget and you would struggle without your regular employment income. The peace of mind it provides makes it well worth the effort and expense.