8 Major Income Protection Myths Debunked
8 Major Income Protection Myths Debunked
Insurance products aren't easy and simple of things to understand and income protection insurance policies are no exception. With cumbersome key points booklets and the media citing stories of context-specific consumer-insurer battles, it's no wonder that many people misunderstand just what it is and what it specifically offers. Insurance
Outlined here are eight major protection myths demystified, to ensure that next time you hear something about income protection, you are able to separate fact from fiction.
Myth 1: It does not pay out
Provided that the policyholder has kept up-to-date using monthly premiums, and has given truthful personal information from the outset, claims are generally paid out. In fact, this past year in the UK, insurance providers paid over 90% of successful claims. In case you are still unconvinced and want to verify specific insurer payout rates, most of them now provide easily-accessible claim statistics on the websites.
Myth 2: It's very costly
This myth is purely subjective. If you were a smoker within a high risk job and wanted a really high level of cover, your premiums would, needless to say, be costly. For the majority however, income protection is reasonable and can cost as low as 30p per day. If you want significantly lower income protection insurance quotes, consider buying via a commission free broker or by extending your deferral period - how much time between a claim being made along with the money being paid for. Premium rates are calculated according to your age, health, smoker or non-smoker and occupation, so if you're serious about cutting the expenses of premiums, it may also be beneficial to adopt a healthier lifestyle. Insurance
Myth 3: It's a waste of money
In terms of ill-health and injury, people can seem to be a sense of invulnerability, and so it's too easy to see how this sort of myth circulates. But ask anyone who's used their income protection policy, and they'll be the first to debunk this notion. Should you be unable to work on account of illness or injury, the monthly instalments provided by income protection becomes invaluable, affording reassurance that bills, loan repayments, and any other expenses could remain financed during your a day off.
Myth 4: It isn't really necessary if you receive benefits
Statutory sick pay along with other benefits tend to pay no more than �400 a month, which for many, would not cover the rent or mortgage. Profits insurance policy however, would pay up to 75% of your usual income, comfortably covering the costs of your living.
Some employers will give you a more comprehensive benefit than statutory sick pay. Therefore, it's important to check if this applicable; simply because this may mean that your deferral period can be extended which can, subsequently, lower premiums.
Myth 5: It does not take same as PPI
Whilst they may sound similar, income protection and ppi (PPI) are not the same products. PPI insures a unique loan repayment, whereas income protection is made to cover a portion of your respective income. If you found yourself not able to meet your mortgage repayments due to ill health, PPI would be on hand for this, but how about all the other inevitable expenses? This is when income protection will come in.
Myth 6: It's not necessary if you have critical illness cover
Whilst critical illness insurance is important, unlike income protection, it would not pay out if you were struggling to work due to injury or if you developed a non-critical illness. For that reason, income insurance will probably be worth considering along with critical illness cover, since this would cover a larger range of eventualities.
Myth 7: It isn't for you if you're self-employed
Self-employed people can get income protection insurance, but be ready to provide the relevant documentation. If you're self-employed, your income may be more variable, so it would be beneficial to regularly take a look at policy to ensure that you're covered for that amount of money you require.
Myth 8: It will require too long to apply
Whilst this could have been true in the days of dial-up-internet and telephone brokers, due to user-friendly websites, it is now easier than ever to search, compare and buy income protection policies.