A Number Of Informations About Income Protection Insurance

It is not uncommon to take out an insurance policy when you buy a car or a property. Or even a new flat screen TV. Most people like the peace of mind this gives them in case their car is involved in an accident or their house is broken into. It is also quite common for people to take out a life policy. Especially when you have other dependants. These days though there are other policies that are proving to be more and more important. Income protection insurance is one of those policies.

Most people rely on their weekly or monthly income to make ends meet. But life is unpredictable and in the event of an accident or illness you may be unable to continue to work. Even though income protection insurance does not cover unemployment it can soften the blow of personal tragedy considerably.

This type of policy is not to be confused with workmans compensation. It is a personal policy to be taken out by an individual and has nothing to do with the company that you are employed by. In the event that the policy holder becomes incapacitated due to accident or illness a certain percentage of his or her salary will be paid out by the insurance company on a weekly or monthly basis.

Depending on the circumstances a person may only be unable to work for a number of months. If this is the case the policy will pay a certain amount for this period. If a person is not able to work ever again the policy will pay out until the policy holder is legally old enough to retire. Most of us have heard the saying prevention is better than cure and when it comes to insurance this is certainly true.

Fortunately the payment made to the policy holder will be tax free. It should be enough to cover the persons most vital expenses such as rent or a mortgage and groceries. The percentage depends on the policy itself but it is normally around 70 percent of your usual income.

Just like a car or a house a persons income is an asset. It could be one of the most important insurance policies you ever take out. The policy you choose should be tailor made to fit your needs. It will depend on the kind of work you do. If you are a truck driver and you break your leg you will not be able to drive for six weeks and this should be included in your policy.

In order for you to claim from such a policy your injury or illness has to mean that you are incapable of performing the duties you are normally responsible for. There may be clauses that specify that you are not able to claim for certain things. These may include illnesses connected to addictions or if your injury stems from illegal activity.

If something does happen to a policy holder, be it an accident or an illness that incapacitates them the insurance company might investigate the claim before any payments are made. This could take several weeks depending on the specific claim. Making the claim as soon as possible may not always be top priority but in the long run it may help to lessen the burden.