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How Insurance for Income Protection Works

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Insurance for income protection or income disability secures your income if you are unable to work because of illness or an injury. While policies for the protection vary, the claims process itself is procedural.

Income protection insurance is also referred to as a salary continuance. It is designed to help you manage daily living expenses if you cannot work for a certain time. Therefore, a salary continuance replaces the earnings lost through the inability to work. The insurance is often taken out by people who are self-employed or by businesses that rely an active workforce.

How Income Protection Works

Each income protection insurance claim is based on a policy’s definition of disability. Normally, income protection covers up to 75{ee2a2ced2e83a70af3b12a5f5f4bc88f1c095ae1846c54ee750c7ec9c020c045} of the policyholder’s gross wages for a specific period, such as two years or up to a certain age. Income protection policies may be level or stepped.

The premiums normally increase with age because the likelihood of making a claim is greater as people get older. Stepped premiums increase each year as you age but begin at a cheaper rate. Level premiums, on the other hand, do not change but are more costly. The level premiums may be adjusted over time because of inflation or insurance fees.

When You Can File a Claim: Checking the Waiting Period

Income protection policies also feature a waiting period. Therefore, you need to look at the fine print to see when you can file a claim. Usually, the waiting period covers 30 to 90 days. When making a claim for income protection, you need to show evidence of your injury or illness.

To make the process more streamlined, ask your insurer exactly what is required to guarantee a faster filing of the claim. The payments that you receive from making a successful claim will encompass the period that you cannot work and that coincides with the terms of the policy.

Income protection enables you to focus on getting better instead of worrying about your bills or day-to-day living expenses. Again, the benefits for income protection can only be paid for a defined period. In addition, you may be able to claim the benefit even if you can perform another job other than your current occupation. For instance, if you can only work part-time after working in a full-time job, you may be able to make a claim for the difference in income.

The amount that you receive in income protection depends on the type of coverage you possess and any listed exclusions. Some of the exclusions may include overtime or similar allowances. Make sure that you are receiving the correct amount by checking with the insurer.

By working with legal counsel, you can receive help if your claim is rejected. A “No Win No Fee” policy enables you to pursue a claim with added confidence.