Buying an income protection insurance policy is a great idea for people who want to protect themselves and their futures. In case you sustain an injury during your work and become disabled, the insurance company will pay benefits to the policyholder. The income protection insurance policy is designed for people who are incapacitated due to an accident or an illness. Previously, these policies were commonly known as permanent health insurance policies. While the policy was first introduced by George Holloway in 1880, it has undergone many changes to become what it is today.
If you are interested in buying the best income protection insurance policy, you should know that the market is quite saturated. There are hundreds of different policies available nowadays so you will have to research carefully. Here are some basic tips to help you choose the best insurance policy available.
Understand the Restrictions
While the benefits of buying the income protection insurance policy are mentioned by almost every insurance company, few would tell you about the restrictions that you will face. First of all, you should know that the policy becomes invalid if the employee loses his or her employment with the company for any reason. If you lose employment due to any other reason than suffering an accident or an illness, you shouldn’t expect any payments from your IPI.
Secondly, the deferred period is also quite lengthy. It is usually a minimum of around four weeks, though sometimes it can go as high as a year. As the deferred period increases, the premium will decrease. Before you sign up for the policy, you should also read about the exclusions that are taken into account such as criminal acts, drug or substance abuse, war, and pregnancy as well as intentional self-harm. If you are caught doing any of these or if a war breaks out, the policy becomes invalid.
Most importantly, you should know that benefit limits are levied so that the benefit you receive will always be significantly lower than the income you generate at the company. This is designed to prevent moral hazard at the company and ensure that the worker’s motivation to work doesn’t decrease due to constant injections of cash without having to work at all.
Applying for The Policy
There are numerous income protection policies that you can choose from ranging from the increasing IPI, unit-linked IPI, renewable IPI, group IPI, reviewable IPI, and several others. Before you file your application, make sure that you read about the multiple types of income protection policies available and then decide which one is the most suitable for you. Talk to an insurance agent to help you choose the best IPI policy that is tailored to your needs.