What is Income Protection Insurance 

Income protection insurance pays an employee a percentage of his or her salary if he or she is unable to work due to injury or illness.  The purpose of this insurance is to help the worker maintain his or her lifestyle as it was before he or she had become unable to work.  Otherwise, the employee may begin to have trouble paying bills and meeting other financial obligations.

This coverage usually pays between half and seventy five percent of the employee’s pre-tax income or gross salary, but these details depend upon the terms of the insurance provider.  The amount of time the employee is covered also varies.  Some companies may provide coverage for a fixed time such as between five and ten years.  Others may cover the worker for shorter terms such as one or two years.  Generally  the more you pay the longer the duration and higher the amount but makes sense to shop around if this is soemthing you feel you need.  Alternatives could be reviewing you financial planning strategy. Have a look at some recommended books below.

Factors for Income Protection Insurance

When employees look for the right kind of coverage, they have to consider the factors that will determine the cost of coverage.  These factors include the length of time needed for coverage and the amount of income that must be covered.  They may also include the employee’s age, gender, type of work and how long he or she has before retirement.

Of course, there are a few conditions in which the worker cannot use this insurance.  Income protection insurance does not cover pregnancy and childbirth, self-inflicted injury or war.  It will also not cover a worker found to have committed a criminal act, fails to follow medical advice or lives outside the United Kingdom.