2 questions to keep in mind as we discuss the different types of income protection.
1. How long would your employer pay you if you were unable to work due to illness?
If you don’t know, you’re not alone especially if you work in the private sector.
Most people haven’t a clue – but you should at least check. You might be pleasantly surprised to find you have income protection in place already!
Some employers are good like that, especially the American firms.
But if you work for an Irish company, you won’t get a shock to find you don’t have an income protection policy. Miserable gits!
2. What happens when this sick pay (if available) stops but the bills continue to pile in.
That’s the scary question.
So what does an income protection protection policy do?
It pays you an income if you’re out of work for more than 4 weeks.
There are three types of income protection
The best type of income protection policy is called….eh…income protection.
This pays you up to 75% of your income until you can back to working your own job.
This is a streamlined version of the individual plan. It’s linked to your monthly repayments that you would still have to meet, even if you were out of work. It pays your mortgage so you can focus on getting better without worrying about losing your home.
Click here to compare mortgage income protection with serious illness cover.
Before we look at wage protector, you should read through the factors that affect the price of income protection.
Your occupation is the main reason you pay more or less than your friend who has the same cover but a different job.
Insurers class your occupation according to their claims statistics. The higher the risk of a claims in your occupation, the higher your premium. The lowest risk are class 1 (desk jobs) while the highest risk are class 4 (manual workers)
Wage protector is a cheaper form of income protection that caters for class 3 and 4 occupations.
i.e where normal income protection premiums might be through the roof.
Wage protector provides a low-cost alternative to the full-blown individual income protection plan. It pays you a percentage of your income for 24 months. After which your claim will continue only if a medical test shows that you’re severely disabled and unlikely to return to work
The average duration of an income protection claim is 5 years.
That’s why I don’t like wage protector.
It pays you an income for 2 years but then stops unless you can prove you can’t do any job.
Think about it.
You would have to be severely disabled not to be able to do any job.
It’s a high burden of proof to overcome.
It’s a policy to avoid unless you have no other options. I would recommend insuring a smaller income on an income protection policy instead.
That’s a quick introduction to the types of income protection available to you.
I think it’s a great product.
I liked it so much I bought the company
Remember that guy? They don’t make slogans like that anymore!
Well, I didn’t buy the company but I did buy the product.
Not even that measly €188 per week disability allowance.
If you have any questions on the above, call me on 05793 20836 or fill in the short form below and I’ll be right back.
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