IP insurance is a helping hand that gives you money each month if you are ill or injured and cannot work. It is meant to replace some of your lost earnings, helping you pay the bills and carry on living life as normally as possible, so you can focus on getting better and back to earning a living.
Having IP will not impact entitlements to state sickness benefits.
But it is not just about the money. If you need to claim, some providers include additional benefits such as support and expertise to help you get well and back to work as quickly as possible.
Do you need IP insurance if you are self-employed?
When considering if IP insurance is right for a client, there are a few questions to ask.
- If you get ill or are injured and cannot work, will you still be able to look after yourself and your loved ones financially?
- If you stop receiving any income, is there anything else that could help you get by, like savings?
- How would you pay everyday bills such as your mortgage or rent, utilities, food, and other general living costs?
- As well as continuing to support loved ones, would you be able to keep your business afloat?
How IP insurance works when you are self-employed
If your client cannot work because of illness or injury, IP insurance will pay them regular money each month. Depending on the policy they have chosen – and if the claim is successful – they will receive payments:
- Until they are fit to return to work;
- For a set amount of time;
- Until the end of the policy term; or
- Until they retire.
With most IP insurance, you can make as many claims as you like while the policy lasts. When you first take out the policy, you can normally choose:
- How much money you will receive if you need to make a claim;
- How long your policy will last for, and
- How long the deferred period is.
However, depending on the chosen IP policy, there may be certain limits or restrictions.
Deferred periods explained
A deferred period is how long you need to wait until you get your first payment after making a successful claim. This can be anything from four to 52 weeks, and some insurers even offer a period of 104 weeks.
You can normally specify how long this deferred period will be when you first take out the policy. Though, again, the particular IP policy you choose may have some limits or restrictions.
The longer the deferred period is, the lower the monthly payments. However, it is important to get a good measure of how long your client could realistically wait for their first payment when you are helping them calculate how long the deferred period should be.
