Income Protection (IP)

Public benefits are going downhill fast. Insecurity is felt at every bend and turn. Nonetheless, as of yet, should anyone fall ill, the employer and the State are going to pick up the tab.

Nowadays, it is also inside the realm of possibility, to end up with a pension for life, should an illness turn out to be a permanent incapacity.

But, for how long can a situation like this, seriously be regarded as acceptable? The answer, it would seem, is not for too much longer.

Several EU member governments are mulling over a tough approach to the procedure. It may look ominous for families finding it really hard to make ends meet. It seems as though many workers will have to look for a private safety net on their own any minute now.

Recent controversy around payment protection insurance (PPI) made consumers regard all products alike as inconvenient. Nevertheless, income protection (IP) stands out as a worthy option for consideration. IP pays an average of 70% of the sick or injured employee's usual wages until they are capable of going back to work, or, in some extreme cases, for the rest of their lives. However, a consumer interested in such a service must have a closer look at the very different companies marketing this insurance. Among the several terms an employee should watch out for, stands the insurer´s definition used to measure whether a claimant is able to work, according to the criteria outlined therein.

Pundits on the matter warn people to scrap generalist descriptions, and choose IP contracts instead, describing only the kind of activities a worker has been trained for. That is, their main occupation. Other terms worth reviewing range from the deferral period until a claim is accepted, to the period of time during which the payment is expected.

Another similar product was distributed a few years ago, but the covered contingency was the unemployment risk. I have recently asked a few companies about the existence of this variety. Either they are not offering it today, or charging a fortune to subscribe to it. They must be thinking, better safe than sorry.