Print
This List
Email to
a Friend
5 Key Options with Income Protection
TIPS 
Tags: income protection, earnings protection, options, insurance
This list sets out the five most important options to consider when taking out income protection insurance. This form of financial protection provides a (usually) tax-free monthly income to replace lost earnings should the plan-holder have to cease working due to sickness or injury.
| | Amount of cover - It is important to insure at least enough to cover essential monthly payments, such as for utility bills, food and debt repayments. The maximum that can be insured is usually 50-65% of pre-tax income. |
| | Length of cover - As a long-term form of protection, plans can and should last until planned retirement. The maximum age plans can last is usually to 70 years old, although this does depend on the insurer. |
| | Setting the deferred period - The deferred period is the length of time someone must wait before the plan starts to payout. It is usually best to set the deferred period equal to the length of time the individual receives full sick pay from their employer. |
| | Index-linked cover - It is possible to have the monthly income insured indexed so it rises over time with the rate of inflation in the economy. This enables the real value of the benefit to remain unchanged over time. |
| | Premium type - Plan can be taken out with guaranteed premiums/rates so they don't rise over time. It is usually more expensive than reviewable premiums/rates at the outset but usually works out cheaper over the life of the plan. |
Lister:
jamiepw
Source:
Income Protection
Other lists of interest:
Current list rating:
4.00