Basically, these plans are designed to replace your income if you are unable to work through sickness, or accident.
Very few people, however, have this type of cover as it is complicated and can be expensive.
For a start, you can not replace all of your income (generally only up to 75%) also there has to be a waiting period between the illness or injury and the payments starting (this can be as little as 1 month or as long as 6 or even 12 months). The plan can be set up as "own" occupation (meaning that you are unable to continue to work in your own occupation, such a dentist) or "any" occupation (meaning that the policy will not pay out unless you are so badly damaged that you can not perform any occupation)
These plans are very attractive for the self-employed, as if they stopped working their income would stop as well.
The cost of these plans is directly linked to the risk associated with the occupation. Working on a construction site is a lot more risky than an average office job.
If you have an income protection plan and change occupations, the insuring office should be informed as they may need to change the terms (and possibly the cost) of the plan, otherwise they may not pay out on a claim.
Due to the complexity of these plans, it is essential that proper advice is taken when applying for one.
If you would like to learn more about Income Protection Plans contact us here.
In order to determine the best solution for you, meet with one of our advisers, who will asses your current situation, or issue that you want addressed, and will construct an effective affordable solution specially tailored to fit your needs.