Income Protection Options

The Basics

 

If you have made the decision to protect your income you should get to know the options you have so that you make the right choices. The first step is to decide:-

1. Do you want to protect your income from?
   A: Accident Sickness and Unemployment B: Accident Sickness Only C: Unemployment Only.
2. How long you wish to wait before you can claim?
3. How long should the benefit pay you during a claim?
   A: Short Term B: Long-term
4. Do you want your premiums guaranteed? So higher than expected claims will not result in your premium increasing!

 

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Different Types of Income Protection?

 

 

Mortgage Payment Protection Insurance (MPPI)

MPPI can cover Accident Sickness and Unemployment is designed to protect your mortgage payments and related costs such as life cover and buildings and contents. Typically the amount of cover is restricted by your income, mortgage payment and other similar policies you may have.

 

MPPI is designed to bridge the gap between state support for home owners for the 9 months where no interest rate support is provided.

 

Even when the state do eventually start paying the interest on your mortgage the amount they pay is unrelated to the actual amount you need to pay your lender. Therefore putting you in a position where you have to pay the difference or accrue arrears and interest which will be the detriment of your credit profile.

 

You are unlikely to get state support if your partner works more than 16 hours per week!

MPPI therefore does its job by providing you with temporary cover for 6, 12, 18 or 24 months (depending of the policy) until your back at work. However although you may pay for the cover for a number of years the contract automatically either monthly or yearly. Which give the provider regular opportunity to change the terms of your cover, its price or stop offering you cover altogether.

 

Accident Sickness or Unemployment Insurance (non mortgage related)

Accident Sickness and Unemployment Insurance cover can also be arranged to cover your income rather than your mortgage payments. You can therefore select the amount of cover which having to adjust the cover amount each time your mortgage payments change.

 

In essence the policy is the same as a Mortgage Payment Protection Policy but with no requirement to link the cover amount required to any payments on any loans.

 

Compare MPPI

 

Permanent Health Insurance (PHI)

Permanent health Insurance is a contract designed to provide short-term and long-term income protection up to your chosen retirement age. It therefore can protect your income for the whole of your working life. Unlike MPPI cover PHI once accepted the terms of your cover cannot be altered or cancelled by the product provider.

 

before benefits are paid in a claim you will need to wait to after the waiting period (also known as the deferred period). During the the waiting period no benefits are payable as it is in effect an excess unless the cover is back to day 1 after the excess period.

 

Policies do offer different disability occupation definitions, which are used when you make a claim. This is an important aspect of the plan. The most comprehensive definition is OWN OCCUPATION (claim paid if you are unable to do your own occupation). This is clearly preferable to a definition of disability that requires the inability to carry out any occupation.

 

Other Definitions:-

Any Suitable Occupation - A claim can be considered should you become unable to do your own occupation or any occupation to which you are suited, by training or experience. This is clearly preferable to a definition of disability that requires the inability to carry out any occupation.

 

What options can you choose with Permanent Health Insurance?

 

Waiting period(s) before you can make a claim:-
3 days back to day 1, 1-week, 4-week, 8-week, 13-week, 26-week, 52-week or 104-week

 

Age when policy expires:-
Age 50+

 

Indexed Benefits:-
In order that the level of benefits in payment are protected against the effects of inflation in the event of a claim, these should be indexed by percentage or the rate of inflation.

 

Indexed Cover:-
In order to provide some protection against the effects of inflation, the level of cover automatically rises by a percentage you choose per annum or by the rate of inflation.

 

Compare PHI

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