By: Simon B
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Income Protection Insurance
Income replacement insurance pays you an income if you’re unable to work due to ill health, injury, or, in some cases, redundancy it all depends on the policy. Income replacement insurance tends to be expensive, income replacement insurance is an underused, but key, insurance. The insurer promises to pay a pre-set percentage or amount of income to you if you have to make a claim. You can live off this money to keep the wolf from the door while you focus on recuperating or obtaining a new job.
Income replacement insurance is also referred to as income protection. Income replacement products can be very complex, and you may need independent financial advice to help decide on the most suitable product for you. Income replacement premiums can be high, which reflects the risks to the insurer. And the higher the amount of income you want to have coming in from the policy, the higher the premiums are.
Some income protection policies payout only if you’re injured and are unable to do any work whatsoever. Others pay if your condition stops you from doing your current job. You pay your money, and you take your choice, but the latter type of policy is more expensive than the former.