Income Payment Protection Insurance

Income payment protection insurance or otherwise known as permanent health insurance or PHI, is an insurance product given by banks, lenders, and brokers to insure wage earners from instances of accidents or illnesses by paying benefits to those who are insured by the policy. IPI is different from PPI in that instead of insuring against the possibility of being unable to pay a debt, IPIs insure wage earners against the possibility of being unable to work due to sickness and accidents by paying out benefits while they are unable to work . To encourage policyholders to return to work after they have recovered their health, income payment protection insurance policies usually have some form of reduced benefits and restrictions outlined in the policy. This aims to make sure policy holders are not tempted to remain jobless long after they have recovered due to the benefits being paid out are higher than their expected salary if they return to work. The benefits are also not payable if the following occur:
Accidents or illnesses arising from substance abuse, self-mutilation, wars, or criminal acts.
Policyholder changes job or is moved to a new position. In this case, the policy will need to be reviewed to assess the new risks that the new job may pose to the insured. The premiums may increase or decrease depending on the new risks that may be assessed.
Because the benefits paid out in IPI policies are tax free, some tax relief available to the policy holder may be reduced .
Benefits are not paid out if policyholders become unemployed for reasons other than accidents or illnesses.
There is a deferment period before the benefits are paid out. This is usually made in order for the claims to be assessed . The shorter the deferment period, the higher the premiums become. This period can be as short as 4 weeks or as long as 52 weeks.
The regular paid benefit is also put at a ceiling which does not exceed the policyholder's income in order to give the insured motivation to return to work when they are reasonably well recovered.
Benefits paid out from income payment protection insurance is different from unemployment benefits in that IPIs only pay out if the cause of unemployment is incapacity. Any other cause such as termination or resignation will not make the policyholder eligible for the benefits. Incapacity is defined as:
The worker is cannot perform their job and is not working in another job due to an illness or accident.
Following an illness or accident, the worker is unable to perform or work in a job suited to their education and training.
The worker is unable to perform or work in any occupation at all due to illness or accident.
The policy holder is also considered incapacitated if due to the illness or accident, they are unable to perform any of the normal activities of daily living such as eating, dressing, bathing, walking and would require the assistance of another to sufficiently function.

Article Source: http://www.newsarticlessite.com

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