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Explaining Income Payment Protection Insurance

Sep 8, 2008
All payment protection policies can be hard to understand, however none more so than income payment protection insurance. This is due to the fact that there is a similar product with a very similar name, this is income protection insurance. While the two insurance products have similarities they are also very different.

Income payment protection insurance is taken for the short term to cover accident, sickness and unemployment. This form of payment protection would payout after a short space of time of you being incapacitated or if you are made redundant. The deferment period is usually around 30/90 days and some providers offer to backdate the protection to the first day of you becoming unemployed or of being incapacitated. Once you have made a claim on the policy it would then last for between 12/24 months and then it ceases regardless of the fact you might not have found work or be fit enough to go back to work.

Income protection on the other hand pays out over the longer term yet it does not cover unemployment. This policy would continue paying an income to you right up to the age of retirement if need be. However there is a longer deferment period.

To ensure that you make the right choice between income payment protection insurance and income protection make sure you take the advice of a specialist payment protection provider. An ethical provider will offer FAQs and articles along with adequate information so that you are able to make the right choice.

Income payment protection would provide the policy holder with the sum of money they insured against. This is amount of their income, up to a certain amount which is set by the provider. This is income is paid tax-free and allows you to keep on top of all your essential outgoings. You would have the money to be able to continue meeting the demands of your mortgage each month. This means that you would not have to worry about falling behind and getting into arrears and be faced with the possibility of having your home repossessed. Just a single missed payment would have the mortgage lender sending you a letter asking you to catch up and another missed payment would mean you would have to try and make an agreement with the lender if possible. However without an income this would be next to impossible and the next step would see the lender taking you to court to seek repossession.

You would also have the money needed to be able to pay credit card or loan repayments and keep your credit rating in good order. This mans you avoid the lender taking action against you and are not at risk of bailiffs coming to your home to take your possessions to sell.

Other essential outgoings could also be maintained such as your food bill, electricity, gas and all other monthly outgoings that need to be maintained. Income payment protection insurance eases a great deal of worry and anxiety at a time when you need to concentrate on making a recovery and getting back to work or when looking around for another job.
About the Author
Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of income payment protection insurance .
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