Income protection insurance vs critical illness

Income Protection insurance : Compare the Pros and Cons. One fear about being critically ill is that you are no longer able to earn an income in order to provide for your family. To put that into numbers, on an individual basis around half a million people each year buy critical illness cover.

Two primary financial products you will come across are income protection and critical illness cover. Let’s look at the similarities and the differences between these. The similarities between critical illness cover and income protection insurance. Both products are designed to help you out financially in the event of significant illness.

You don’t have to choose either income protection or serious illness cover. It might be a case where buying a little of both is the best way to protect yourself. Serious illness cover is for immediate, short term bills.

And in the case of getting sick or injured and becoming unable to work, there are two main options for protecting yourself and your family: critical illness insurance and income protection insurance. Regular income is necessary, as mortgage’s and other payments mean your family or home is at risk if you have to be off work due to a critical illness and recovery period. If you get one of these illnesses, a critical illness policy will pay out a tax-free, one-off payment.

No one wants to think about becoming seriously injured or being diagnosed with a life-threatening chronic illness , but the fact is, you really never know if and when one or both of these tragedies might strike. What are the benefits of income protection and how does it work? Critical Illness Insurance vs. Take a look at our guide to find out more. One of the biggest fears for many people is not being able to pay the mortgage - or meet other financial commitments - if they are made redundant or unable to work due to illness or accident.

What is income protection insurance ? You can get short-term or long-term policies, depending on your needs. Despite this, business critical illness cover, or key man income protection can help businesses claim back the costs of sickness. It also provides a great benefit for employees, who can often receive more than the statutory amount or, even, a full salary if they fall ill.

The first is called permanent health insurance (PHI) – not to be confused with private health insurance that covers medical costs. There are two main types of income protection policy. PHI means you can protect a portion of your income – often of your gross salary – in the event of illness or an accident. It’s not the same as critical illness insurance , which pays out a one-off lump sum if you have a specific serious illness. Below I explain what income protection insurance and critical illness cover are and why you might need them.

Disability insurance vs critical illness insurance. They also have many of the same exclusions, such as for self-inflicted injuries or injuries caused while participating in a crime or fighting in a war. If we look at a 35-year-old non-smoker taking critical illness cover of £250over years – this would cost £per month. Each product is designed to cover a very different risk, however, so it’s important to understand the difference between them before you make any decisions. IPI policies were formerly called Permanent Health Insurance (PHI).

It could provide you with a tax-free income and could continue to pay out until you are able to return back to work or retire. Income protection insurance is a policy that protects you against loss of income due to unemployment, illness or accident. Both insurance plans provide a level of protection against the financial losses brought about by sickness. However, disability insurance and critical illness insurance are not the same.

Is income protection the same as PPI? A critical illness insurance policy is an additional health insurance policy which caters in providing financial protection and security against specific listed life threatening diseases.