The Pros and Cons of Income Protection Insurance
Income Protection Insurance is popular in the United Kingdom where it is purchased privately by individuals who want protection similar to that offered by disability insurance in the United States. It operates in much the same way and provides benefits that will mitigate the repercussions of an individual becoming involuntarily unemployed due to accident, illness, including that of family member, and employment downsizing. In most cases, hospitalization and medical benefits are paid and a maximum of 50% of the insured individual's normal salary. The maximum term is one year and it becomes effective, that is benefits are paid after a thirty-day period but are retroactive to day one of the illness or injury.
To qualify for Income Protection Insurance an individual must have been employed continuously for at least 16 hours a week for the preceding 6 months. The individual must be over the age of 18 but less than the statutory retirement age, 65 for men and 60 by women. The individual must be a resident of the United Kingdom and the place of employment must also be UK based.
Seasonal and temporary employees are not eligible and individuals can be excluded from coverage or payment if they were aware of pending unemployment or health problems prior to taking out the policy.
The policy coverage is terminated in case of death or leaving the UK. The benefits also end when the individual reaches retirement age. The policy may be discontinued by the individual but also, under certain conditions by the insurer, which is a negative feature.
There are several conditions that make an individual ineligible for coverage and conditions that are not covered by the policy. Benefits will not be paid in the event becomes unemployed due dismissal for due cause or breach of contract. This includes negligence, poor work quality or any impropriety. In the case of voluntary unemployment, no benefits will be paid.
The policy does not cover employment albescence due to pregnancy. In cases of unemployment due to disability caused by stress, backache, HIV infection, nervous disorder and drug or alcohol abuse, the underlying condidition must be certified by a consultant or it will not quality for benefits under this policy. Also not covered is loss of income due to a disability that results from self-inflicted wounds or a suicide attempt. Also, the policy will not cover the individual who becomes temporarily unemployed due to hospitalisation from non-required surgery, that is to say, cosmetic surgery.
by Sally.Anderson 19 years ago