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Income Protection Insurance and PPI: The Differences

Payment Protection Insurance (PPI) and income protection insurance (IPI) are two different types of insurance that are often confused with one another. Although both offer financial protection in the case of an unexpected event, there are key differences between the two.

Image of apples and oranges.

The primary difference between PPI and income protection insurance is the type of protection they provide. PPI covers debt repayment, such as credit card bills, loans, and mortgages in the event that the policyholder is unable to make payments due to an unforeseen circumstance, such as illness or job loss.

By comparison, ncome protection insurance provides a short-term income stream to replace a percentage of lost wages due to an unexpected event. IPI is designed to help maintain your lifestyle, while PPI is designed to help you avoid debt repayment default.

Another key difference between PPI and income protection insurance is the way in which they are paid out. PPI is typically paid out as a lump sum, while income protection insurance is paid out in the form of regular monthly payments. This means that with PPI, you will receive the full amount of your debt repayment at once, while with income protection insurance, you will receive a regular income stream to replace a portion of your lost wages.

Finally, PPI and IPI also differ in terms of the events they cover. PPI typically covers only job loss and disability, while IPI can cover a wide range of events, such as sickness, accident, and in some cases, unemployment and redundancy. This means that with income protection insurance, you may be able to receive financial protection in a wider range of situations. In conclusion, PPI and income protection insurance are two very different types of insurance that offer financial protection in the case of an unexpected event. However, there are key differences between them in terms of the type of protection they offer, the way in which they are paid out and the events they cover. It is important to consider all of these factors when making a decision about which type of insurance you require.