Income Protection Insurance

So what is Income Protection Insurance?

The purpose of an income protection Insurance policy is to replace a portion of an insured policyholder’s income if they are unable to work due to illness, accident, or disability.

Typically, a policy will pay out until the policyholder is able to return to work, the policy term ends, or in the unfortunate event of the policyholder’s death.

Additionally, there are benefit period policies with terms ranging from 1 to 5 years, which can lower premium costs and make income protection more affordable. However, it’s important to note that if an illness extends beyond the benefit term, the payments will cease at the end of that period.

Most policies include an initial waiting period before benefit payments begin, known as the deferred period. This period can be customized to align with employer benefits, ensuring payments commence after the employer’s sick pay ends.

What is typically covered?

1. Illness: Covers a wide range of illnesses that prevent you from working. This can include both short-term and long-term illnesses.
2. Injury: Provides coverage if you are unable to work due to an injury. This can include injuries sustained at work, home, or elsewhere.
3. Disability: Covers both partial and total disabilities that inhibit your ability to perform your job.
4. Accidents: Provides financial support if you cannot work due to accidents that result in temporary or permanent inability to perform your job.
5. Mental Health Issues: Some policies cover mental health conditions like depression or anxiety, provided these conditions prevent you from working.
6. Rehabilitation Support: May include benefits for rehabilitation and retraining programs to help you return to work.
7. Chronic Conditions: Policies often cover chronic conditions that result in long-term absence from work, although specifics can vary.

What is Usually Not Covered:

1. Pre-Existing Conditions: Many policies do not cover conditions that existed before the policy was taken out, or they may have a waiting period before such conditions are covered.
2. Self-Inflicted Injuries: Injuries or illnesses resulting from self-harm or attempted suicide are generally not covered.
3. Drug and Alcohol Abuse: Conditions or injuries resulting from substance abuse may be excluded.
4. Voluntary Unemployment: Coverage typically does not extend to situations where the policyholder voluntarily leaves their job.
5. Pregnancy: Normal pregnancy and childbirth are usually not covered, although complications arising from pregnancy might be.