Have you ever considered what would happen to you or your loved ones if you couldn’t work due to a long-term illness, or injury which resulted in a loss of earnings? How would you cover your household bills, and child-care costs? An Income Protection Policy can help you to protect your income as well as your lifestyle.
What is Income Protection?
Income protection is an insurance policy that typically pays out between 50%-70% of your gross salary if you’re unable to work due to illness or injury. The monthly payments are free from income tax and will generally pay out until you return to work, retire, die or your plan ends. Differing plans are available, allowing you to select the deferred period most appropriate for your needs and choose how long you want the payments to be made for, suiting all budgets.
It does not provide cover if you are made redundant, nor does it have a cash in value at any time. If you stop paying your premiums your cover will stop.
How much does it cost?
Premiums are calculated based on your health and job category. If you’re a smoker, you’ll pay a higher premium than a non-smoker. If you’re in an office based job with minimal travel you will pay a lower premium than someone who has a heavy manual job, or works with machinery etc… Essentially the riskier the job the more likely you will be to make a claim hence premiums reflect this additional risk, although, we do have access to providers who do not penalise smokers and are more understanding to those in higher risk employment.
The good news is that once you’ve been underwritten by the insurer the premiums are guaranteed for the term of the policy. Premiums would only change if you make amendments to the policy or opt for an increasing level of benefit, which has reviewable premiums.
When does Income Protection pay out?
Income protection polices pay out only once a pre-agreed period has passed, which can range from one month to twelve months after you put in the claim. The longer the deferral period chosen the lower the premium.
How an income protection insurer defines your inability to work will also influence whether your policy pays out. Insurers typically uses three methods known as ‘activities of daily living’, ‘suited occupation’, or ‘own occupation’. There are big differences between these three methods and for this reason, it is imperative that you seek professional advice before taking out an Income Protection policy.
How can we help?
Our role is to guide you through all the options available and identify the most suitable policy for your needs. Our expert advisors have years of experience arranging Income Protection polices and have built up excellent relationships with all the UK’s leading insurers. We have access to the whole market; hence you can be sure that we’ll be able to recommend the most suitable policy.