Are you interested in Income Protection, but not exactly sure how it works or if you need it? Our team of expert advisers are here to help. They can explain the options and compare policies and prices from the leading insurance companies. Our service is completely free of charge and we are totally independent and impartial.
Income protection insurance offers peace of mind and security against lost income. If you are unable to work because of illness, the policy would pay out a portion of your monthly earnings, allowing you to continue to cover your essential outgoings.
These payments can be used to cover your rent or mortgage payments, bills and day-to-day living while you get back to work. The best policies will continue to pay out for as long as you cannot work, or until you are of retirement age.
Who needs Income Protection Insurance?
Income Protection is perhaps one of the lesser-known protection insurance products on the market, but certainly one everyone of working age should consider. If you have monthly outgoings and don’t have indefinite sick pay from your employer – or enough savings to keep you going indefinitely – Income Protection is a good alternative.
What are the chances I really need it?
Nobody likes to think about illness, injury or losing your job, but unfortunately it happens to lots of people, every year. Have you considered how you would cope if you were to lose your income, for whatever reason? Here are some facts to consider:
Each year one million workers find themselves unable to work. ABI.
31% of UK adults have experienced unexpected leave from work Aviva
48% of households have either no savings or less than £1500 savings ONS
Only 43% of employers offer Occupational Sick Pay the rest are left with Statutory Sick Pay only.
Statutory Sick Pay pays only £109.40 per week for 28 weeks, after the initial four days of illness. (Gov.uk)
Income protection is a policy designed to come into play if you become ill or injured and subsequently could not work and provide for yourself and your family. Yourself and any dependants would have a monthly payout to rely on, usually around 50-70% of your regular earnings until you can return to work or retire. Income protection can be an addition to a life insurance policy, or taken out independently.
A critical illness can affect anyone at any time and wreak havoc on your world. Critical illness cover offers a lump sum payout on diagnosis of any of the specified critical illnesses covered by the policy. It takes away the financial stress at an otherwise upsetting time, if you are unable to work and therefore support yourself or your dependants.
Income Protection will protect your outgoings should you be off work for any health-related reason. This could include short term injuries to significant serious illnesses. You’ll receive a tax free weekly or monthly lump sum while off.
What are the benefits of Income Protection?
Income Protection will cover up to 70% of your monthly income should you fall ill or suffer an injury, providing peace of mind that your bills will be covered and you won’t need to use your savings to get by. There are different levels of cover you can chose to suit your financial needs and budget. The sum paid to you is tax-free.
Are there exclusions to Income Protection policies?
Most policies tend to have few exclusions; however most policies do exclude drug and alcohol misuse and self-inflicted injuries. It is important you check your policy documents as it may differ from each insurer.
Does income protection cover redundancy?
Usually no – the cover is designed to protect you from a health perspective, not employment.
I am unable to work due to an illness – when can I make a claim?
When setting up your policy, you will choose a deferral period – usually between 1 week - 12 months. If your company offers full sick pay, then you would not need to start claiming until that ends, meaning you will pay a lower premium as you will have a longer deferral period. If your company only offer SSP, then you may need to opt for a shorter deferral in order to cover the loss of income – your premium is likely to be higher.
Do I need Income Protection if I get Statutory Sick Pay (SSP)?
Statutory Sick Pay is paid to you by your employer if you are too ill to work, however the payment is very minimal at £109.40 a week and is paid to you for up to 28 weeks. Income protection can cover 70% of your lost income.
I’m self-employed – am I eligible for Income Protection?
Dissimilar to Statutory Sick Pay, Income Protection is designed to cover everyone’s income. With no SSP to fall back onto, the self-employed are particularly at risk should they be out of work.
We work with the UK leading insurers. This means we can compare the market and provide you with the very best quote to suit your individual needs and often for less investment than you may initially think.
