Income protection insurance can be defined as a type of insurance policy under which the policyholder is assured regular paying benefits in the case he or she is unable to hold a job due to some kind of an illness or an accident.
This insurance is available mainly in the United Kingdom as well as Ireland.
Initially, this insurance was also termed as the permanent health insurance.
Under the rules of this insurance, the inability of the policyholder to perform his or her work duties will be characterized as the following:

• If the policyholder is self employed and the person is not able to undertake any of the work required and also if the person is unable to take up another job due to an illness or an accident that has incapacitated the person.
  
• If the person is specially trained or educated in order to perform a particular work or duty but is unable to do so because of an illness or accident that has rendered the person incapacitated physically.
  
• If the person is not in a condition to hold any kind of a job that requires him or her to perform certain duties due to an illness or an accident.
  
• If the person holding the policy is unable to perform any kind of normal day to day activity such as eating, dressing, washing, walking, cooking shopping etc due to an incapacitation arising from an illness or an accident.
  It is important for the policy to actually state the various functions and the definitions of each function in such cases.
  

The income protection insurance usually has a limit for payment.
This means that there usually is a fixed percentage of payment that will be made by the insurance if the person invokes the coverage.
In most cases, the benefit of this insurance is limited to around 70% of the gross earnings of the policyholder.
But this is not fixed and could be even less for those who have very high income earnings.
The maximum limit of the income protection insurance benefits may be reduced if the person is supposed to receive other state benefits or if the policyholder is to receive benefits from other insurance policies too.
The time gap between the instance when the claim is made and when the payments start coming in is known as the deferred period.
This period between the claim and the payment can influence the cost of the policy significantly.
Advantages of Income Protection Insurance

• The income protection insurance offers coverage over various kinds of problems such as accident, illness, sickness etc.
  The number of benefits offered under this insurance is much better compared to other personal insurances.
  
• The payments from this insurance will continue for the policyholder till the time of his death, when he recovers, his retirement or till the period when the policy terms seizes to exist.
  
• The benefits from the income protection insurance are usually received on a monthly or a weekly basis.
  They are also free of tax.