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Income Protection Covers Your Commitments Against Unemployment

Jun 28, 2008
Many individuals are aware that they are able to cover their loan or mortgage repayments as the lender usually asks them if they wish to take out a policy. However you can also choose to cover your income against unemployment or incapacity due to sickness or accident. Income protection allows you to cover a wider range of outgoings by ensuring that if you cannot work or are unemployed through no reason of your own you would receive a replacement income.

There are standalone specialist providers who for a premium each month will allow you to insure up to a certain amount of your own income. This would then be paid back to you once you had been unable to work for a certain length of time or had been unemployed. The income would be tax-free and you would then be able to use it to repay all the bills you regularly maintain.

You would have the money to be able to pay your mortgage repayment when it was due and this is one of the biggest outgoings that you have to maintain. Failure to be able to keep up with the mortgage repayments means that you are at risk of having your home repossessed. Even by getting behind with just one monthly repayment the lender would send a warning letter and ask you to show how you can keep up with your mortgage along with repaying the arrears. If you cannot do so and continue to miss repayments then you would be at serious risk of losing your home.

With income protection behind you, you could also continue to meet any loan repayments you have or credit card debts. You would also be able to continue putting food on the table and pay bills to keep your home warm and lit. There would be no having to juggle your bills around in order to be able to pay them and this gives enormous peace of mind. It would allow you to concentrate on making a recovery and getting back to work or would give you the time to be able to search around and find work again at the same salary that you were getting.

You do have to shop around for the policy to get the best deal as the cost of protecting your income will vary greatly from provider to provider. The terms and conditions of the cover will also vary and these have to be checked when looking for a policy. These will hold the exclusions to be found in the policy and when cover begins and ends.

All income protection policies will only pay out for so long before the cease and there is also a waiting period of being unemployed or incapacitated before you are able to put in a claim. Some providers will offer protection that would begin to provide you with an income after 30 days; others may state that it could be as much as 90 days before their policy would payout. Policies can usually be taken out to supply you with an income for between 12 months and 24 months and some providers will offer to backdate your policy to the first day of becoming unemployed or from being unable to work.
About the Author
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of income protection .
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