Income protection is a long-term insurance cover that provides benefits up to retirement age, if necessary. Income payment protection (IPP), which is a shorter-term insurance product often confused with income covers, offers payout terms of 12 to 24 months, typically. IPP allows full time employs to protect up to half of their monthly income, or 1000 pounds, whichever is greater. It also offers the most flexible coverage options of any of the payment protection insurance (PPI) products. These include mortgage covers and loan covers as well. Both these cover types offer a bit higher payout coverage, but less flexibility.
Income protection, as well as being long-term in nature, also does not include unemployment benefits. Since the State has reduced or eliminated its assistance for unemployment since 1995, IPP is especially important security for many Brits as it does offer involuntary redundancy coverage. Along with the forced unemployment benefits, IPP also covers illness and accidents that are covered under all the payment protection insurance industry products.
There are many companies that provide protection insurance, but not all providers are equal. In spite of the fact that surveys show Brits are still somewhat unaware of payment protection insurance benefits and sometimes unaware whether they have the insurance, consumer groups have heightened awareness in many positive ways. Citizens Advice, a leading consumer advocate, did a great favour to Brits by prompting an investigation by the Competition Commission. In 2005, the group lead a super complaint to the Office of Fair Trading (OFT), which charged high street banks and lenders with mis-selling PPI products. The Competition Commission is set to announce results of its subsequent investigation in early 2009.
The greater awareness of institutional ethics has enhanced focused on a more reputable provide of the short-term products. Independent insurance brokers maintain a much more credible relationship with consumers. Their products are generally 40 to 80 per cent lower in premium costs than the larger institutional products. Their benefits and services are also much more customer-oriented. Banks and lenders notoriously packaged insurance protection with loans to pressure borrowers into adding expensive premiums to their product portfolios.
Brokers can help insurance customers find great plans and the best rates. Many offer rates that are the same regardless of customer's age. This is quite different than typical income protection products or other work-related health plans. Brokers also put together discount opportunities, including joint insurance covers. There are a few minor exclusions to benefits that consumers need to be aware of, but these exclusions are more limited with brokers and disclosure is much more transparent. Brokers are generally honest with customers and let them know what is covered and what is not.
Brits need to prepare for negative events that can prompt a temporary loss of income. Income protection or work health plans are common for meeting long-term needs. More people need to look to payment protection insurance products for their short-term unemployment / illness needs. Payment protection insurance products are designed to help people sustain themselves through prolonged illness or injury.
| Simon Burgess is Managing Director of the award-winning British Insurance, a specialist provider of income protection. |
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