Income protection insurance not as popular as life insurance

Mon, 11 Jun 2007

According to recent reports, the take up of life insurance and critical illness insurance is good, but fewer people realise the benefits of income protection insurance, or the pitfalls it could protect against.

Many individuals take out life insurance with their mortgages, insuring that they can pay off their mortgage in the event of death. Similarly, many homeowners and other consumers have critical illness cover, even though the common reasons for absence from work are often not covered.

Income protection insurance can protect against simple problems such as stress and back pain . Usually, when problems such as this keep employees away from their desk for some time, employers will continue to pay their salary up to a certain point. However, this income does come to an end, and income protection insurance can step in at this point.

The group risk marketing manager at income-protection provider Friends Provident, Bob Cheesewright, reportedly commented: " Income protection is structured so it starts to pay when you are unable to do your job. It could start to pay from day one but the cost would be astronomical, and of course most people have a bit of fat they can live on. So there is a deferred period, which is a length of time before the insurance kicks in. This can be anywhere from a week to a year."
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