Make Sure You Have the Right Protection

One form of protection that most of us need but very few have is income protection (IP). The financial services industry are to blame for the majority of this, as when you take out a loan or mortgage, you will come away with some form of protection policy but the problem with that is that it is usually the wrong one.

Financial providers and advisers have taken the easier option for too long now and have been choosing the simpler route of selling critical illness and payment protection. They would rather do this than take the time and trouble to make sure their customers are properly protected. This really must change.

Sales of critical illness insurance far outstrip sales of income protection. With that said, only half of people who were off work sick for six months or more due to an accident or sickness would receive an actual pay out from their critical illness policy. This is due to the fact that the main causes of long term absence are stress and back pain. These types of sickness are not covered by this type of insurance.

Many believe that the income protection market must change too. The products should be made simpler to understand and the underwriting process should be more straightforward. At the very least, insurers should try and categorize occupations the same way.

People also believe that you should be able to receive a higher level of income than 85 pounds per week without any state benefits being reduced.

Getting the right deal - If you decide that you do need IP. Make sure you get the right deal and not one that is just similar to IP. For instance, products such as mortgage protection and payment protection sound similar but these just cover a specific debt, such as your mortgage payments or loan payments. They will not give you an income to pay for other essentials such as food and bills.

Mortgage protection and payment protection usually pay out for a limited period of 12 months. IP pays out until you can get back to work or until the end of the policy term whichever is longer. You would think IP would be more expensive than the other cover mentioned, however, it is often the same cost.

Unlike Payment Protection Insurance, IP will always be is based on your personal circumstances, especially your medical history. That is why far more IP claims are paid out compared to PPI claims. Pioneer has recently announced they pay 96 per cent of their IP claims.

For a genuine IP policy you will have to complete an application form that asks for details about your health, age, occupation, etc. The best thing to do is always take full advice when buying protection insurance and if possible see an independent financial adviser that specializes in protection insurance.

One of the most important financial issues you can deal with is making sure you have the right protection in place at a price you can afford and that meets your circumstances. Most importantly, don't be afraid to get professional help.

Brokers Online is a fantastic financial web site, offering information and articles about Mortgage Payment Protection, Income Protection Insurance, Redundancy Insurance and many many more Insurance products