Posted on February 18, 2010.
Income Protection Insurance - the harsh reality How much money will I need?
The amount of coverage you need and when you receive the payment, depends largely on the resources you already own. Maybe your contract of employment states your employer pay you for the first six months, in which case you need to start your coverage from the same month seven of your illness.
If you are self employed with savings you can take advantage for the first three months, you should begin to cover from the fourth month. You must take into account the state benefits you receive, when calculating the coverage you need.
The great advantage of income protection (IP) is that you can fit your lifestyle. You decide on the amount of coverage required and when it should start.
How much will it cost?
Your personal circumstances and the nature of your employment will decide the amount of the premium you pay.
Premiums vary greatly with the cost being assessed on your sex, health status, occupation, level of coverage you need and if you are a smoker. Women will be sad to learn that they must usually pay more than men.
Consider this example. the male non-smoker ..... paperwork ...... 30 ........ the premium is 17 pounds for 36 pounds per month, which pays £ 1,000 a month income after 6 months. However, a designer of a similar age would pay between 35 pounds and 112 pounds per month, as has chosen as its supplier.
Sex, occupation and whether you smoke are not taken into account with the age related policies.
Your work can affect the amount you pay
The amount you pay for a policy can be influenced by the type of job you have. An exception to this rule is an age-related scheme. Most companies divide the types of jobs in 4 categories of risk.
We asked providers of income protection insurance to tell us how they grouped jobs, and we provide examples of typical jobs in each group.
Here are a few examples, but there is a word of warning, that the same work can be classified differently from one insurer to another.
aec Class 1 managers, administrative staff and professionals. Business mileage Limited. Secretary, computer programmer, in the administration
aec Class 2 Some workers with high mileage busines over 20,000 miles per year. Engineer, assistant shop, florist. Light manual work qualified.
aec Class 3 A few semi-skilled and skilled manual workers. Plumbers, teachers, care workers
aec Class 4 Some unskilled workers and heavy manual workers. Mechanic, bar person, construction worker
Unpaid workers
Just because you have no income does not mean that coverage is not necessary. For example, a third person, caring for an elderly parent, can develop a long-term illness and be unable to meet their family obligations. What the rest of the family be able to stand, or do they need insurance coverage to pay for an expensive third person outside the family? However, a word of warning, some policies do not provide coverage for caregivers.
