Income Protection Insurance

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The Income Protection Insurance is a type of Insurance Policy which is mainly issued in Australia, New Zealand, South Africa and the United Kingdom. The holders of this insurance Policy who are incapacitated and hence are unable to work will be given the Claim amount. This policy is also called as Permanent Health Insurance Policy. Holloway Friendly Society was the First provider of this kind of Insurance and this Society is still trading.

This insurance policy provides more number of benefits than any other Insurance Policies like Life Insurance, Accident Insurance, Health Insurance etc,. The policy holders will be paid the amount when the policy holder becomes incapacitated and the payments will be paid continuous till the earliest or Death of the policy holder or his recovery or till the period of coverage.

The another important benefit is that the payments received under this policy are tax free I.e there is no obligation to pay any tax on the amount received under this policy. The payments are usually received every week or month. The Company providing this insurance policy cannot refuse to cancel this policy as long as the policy holder is paying the premiums. In some of the policies the waiver of premium option may also be provided.

Even though this policy is way better than some other related policies how ever even this policy has certain restrictions some of  which as as follows :

• The payments will not be made if the policy holder becomes unemployed due to reasons other than Illness or accident. 
• Many exclusions apply to most of the policies issued by many insurance companies and no benefits will be paid to the policy holder in case of the accident or illness arising due to the events like drug abuse, intention self harm, criminal acts or pregnancy. 
• As this income is tax free the tax reliefs of the individual, receiving this income, will be reduced.