Income insurance can give great peace of mind if you lose your income after becoming unemployed. No one can realistically say that their job is safe these days with redundancies happening when we least expect it. If you were to be made redundant then relying on redundancy money to continue living your lifestyle would not be the best form of protection. The same applies if you were to become ill and were not able to work or if you should suffer an accident that kept you working. While you could put in a claim for State help you would have to meet many conditions. A policy would provide the amount of income you chose when applying for the cover.

You can insure up to a certain amount of your own income each month and this would be paid tax-free once you had been unable to work or had been unemployed for a given period of time. This waiting period is set by the provider and can be anything from the 30th day up to the 90th day. Providers might backdate the benefit to the first date of unemployment or incapacity so you have to check in the terms and conditions. Cover would provide you with your income for between periods of 12 months and 24 months and then it would just expire. However this is usually enough time to find work or to make a full recovery. Along with checking the starting and ending dates and cost of the insurance you should also check the exclusions that could apply in the cover.

There is a similar named product that will pay an income but it should not be confused with income insurance. Income protection insurance would payout over a longer term which can be up to the age of retirement. It would protect the policyholder against being unable to work after suffering illness and accident but it would not payout if you should be made redundant. Always bear this in mind when looking for protection online to make sure that you get the protection you need for your circumstances.

Your income insurance policy would provide you with an income to ensure that you would be able to continue servicing all of your commitments each month while you recovered or found work again. This takes a great deal of stress away and means you would be able to pay your mortgage and loan commitments. Your mortgage has to be kept up with if you are not to get on the bad side of your lender. If you just get behind by one or two repayments then you are looking at the lender seeking to repossess your home. Loan debts would see a decline in your credit score and could possibly see you having to go to court. In extreme cases depending on the amount of debt you have the lender could also take you to court and this could mean you would have a County Court Judgement against you. All of this can of course be avoided simply by looking around for protection and paying a small premium each month with a specialist in payment protection.

simon burgess is managing director of the award-winning british insurance, a specialist provider of income insurance.

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