It may be that you have concerns over what would be the effects on your life if you lost your income. They might, in fact, be severe and that is why companies such as Drewberry Income Protection offer income protection insurance policies.
The whole area does generate concerns though and here is some further information by way of answers to some frequently asked questions.
What circumstances does income protection cover?
Typically, those arising from situations where you are unable to earn income due to an accident or sickness.
In some cases it might be possible to include unemployment cover for things such as compulsory redundancy, however, that is typically only available for a maximum period of up to 12-24 months’ claims, depending on your provider.
How long can I claim an income for if an accident or sickness prevents me from working?
That depends very much upon your policy.
It might be possible to take out cover that will pay out for a maximum of a specified number of years or in other circumstances, right up until you reach your normal retirement date.
What sort of pay out does this involve following a successful claim?
As the name suggests, income protection cover will, following a successful claim, pay you a monthly income for a maximum period of time as specified by the policy you selected.
You are free to do whatever you wish with that income.
This differs from some forms of critical illness insurance, where a lump sum is payable upon the diagnosis of one of a specified range of conditions.
How much each month will I be able to receive by way of income?
Once again, that will rather depend upon the sort of cover you have selected and paid for to begin with.
As a general rule, providers of this type of cover may specify a maximum monthly sum that is a percentage of your previous earnings. That percentage might vary, but it could be anywhere between 45 and 65%.
Will I need a medical?
Possibly, depending upon your declared medical history.
If you notify your insurance provider, as you must if appropriate, that you have previously suffered from a serious medical condition they may take it under cover but might require their own independent medical advice before deciding whether or not to do so.
Generally speaking, insurance providers are realistic and they do not expect people taking out this type of policy to be superhumanly fit with an entirely illness-free history. It is a question of them attempting to identify and quantify, the risks associated with any illness you declare.
What would I need to do to make a successful claim?
The exact procedure will be highlighted within your documentation or explained in detail by your policy provider.
Typically, if your claim relates to a medical condition following an accident or illness then you will be expected to produce some supporting documentation from a medically qualified person. In some circumstances, the insurer may require you to undergo an independent examination.
Note that if you have own occupation cover, your policy may typically pay out if you are unable to continue with your existing work. By contrast, if your policy offers suitable occupation cover, your insurance provider may require you to accept alternative employment in another position – even if that was not commensurate with your old job.
