Whats the difference between income protection and unemployment insurance? I don't understand why one is under life insurance chapter and the other one under general insurance?
My understanding is that it's to do with the insured risk, and also the term of the payments in the event of a claim. Income protection policies typically pay out in the event the policy holder is incapacitated in someway. For example, an injury which prevents them from working. It provides a stable, long-term income to support the policy holder and their dependants, in the absence of income from working. Unemployment insurance pays if the policy holder loses their job. For example, they could have been made redundant. It is designed to provide a short-term income whilst the policy holder finds another job, and will be limited in its term (such as for up to a year). ... at least that's my understanding! Hopefully someone will correct me if I'm mistaken.
Income protection covers policyholders who are unable to work due to accident or sickness. The Core Reading suggests that it might cover unemployment, although this isn't the main part of the cover (and indeed unemployment is often NOT covered). Unemployment insurance would be more likely to cover things like redundancy (ie the policyholder is healthy). As a general rule, the products in the life insurance chapter are long-term products (in-force for many years), whereas the products in the general insurance chapter are short-term (renewable each year), and this is the case with IP / unemployment insurance.
