IPI – Benefits, Restrictions, Suitability and Need, Pricing

Income protection is an insurance policy that covers for your income when you are not able to work due to some injury or illness. It pays a part of your salary monthly to the insured and in other word can be touted as replacement salary. Income protection insurance was previously known as PHI or permanent health insurance. There are several factors attached to income protection insurance which one should be aware of before taking it up and it includes:


There are several benefits of income protection insurance over many other types of insurances like that of sickness, accident, personal accident and unemployment insurance.

  • The benefits of IP insurance is that the policyholder is given the benefit in case he becomes incapacitated till he recovers, retirement or death, whichever comes first. It may also end up with the end of the contract.
  • The benefits are paid to the policyholder monthly or weekly and the best part is that it is tax free.
  • The insurance company cannot cancel or refuse to renew the policy of the policy holder is paying the premium regularly and has not committed any fraud


There are a number of restrictions which may affect the eligibility of the policyholder for the benefits:

  • The policy will not pay the benefits if the insured becomes unemployed for a reason which is other than that of injury or illness.
  • The waiting period is long and the minimum is 30 days or can be as long as 2 years. However, longer is the waiting period lesser is the premium amount.
  • Exclusions are mentioned in the policy for no coverage if illness is due to alcohol abuse, self-harm, criminal acts and pregnancy.
  • The policy may become invalid for the policyholder if they change their occupation

Suitability and Need

  • IPI is needed even though there are state benefits available as the given income is way less than the average salary of the wage earner and hence additional protection is required. It is also advised to take the policy whose benefits lasts till the retirement age of the policy holder.
  • The policy is of no use if the unemployment is due to reason other than injury or illness.
  • The policy does not provide health insurance, death benefits or coverage for critical illness


The income protection insurance policies are pretty expensive as it guarantees the benefits. However, the premium can be lessened if the deferred period is increased.