Income Protection Insurance

Income Protection

This is designed to pay out a monthly income to you are unable to work due to having an accident or becoming sick.

These policies are great because if you had a car accident and you broke your hand, which was going to take months to heal, your rent, mortgage or bills will still keep coming in. It would be handy to know that you have something in place to cover this eventuality. A policy like this would be able to pay you until you return to work, no matter how long that took.

Income Protection works in this way. If you wanted to cover £1000 over 25 years (maybe in line with a mortgage although you don’t have to have a mortgage to get this policy). If you had an accident or became sick in year 5 and they start to pay you monthly payments then as long as you are not fit enough to return to work you will be paid out for the extra 20 years you have the cover.,

There are different types of cover under this policy which can cover you if you are unable to return to your own normal employment or maybe will cover you if you are unable to work doing “any occupation” so there are lots of different elements to this but please make sure when you speak with your adviser you know exactly what you are getting and what you are covered for. For example, if you have covered for “own occupation” then as long as you are unable to return to the job you are doing currently you will be covered. If you choose the “any occupation” definition, they will only pay out if you are unable to return to any form of work

Imagine if you had life and Critical / Serious Illness cover and Income Protection and you contract cancer then you could make a claim and get a lumpsum to repay your mortgage under the critical illness policy then you could make a claim on the Income Protection policy to also get a monthly income until you return to work taking the stress out of having to work to pay the bills when you are ill.

Income Protection Q&As

There are a couple of differences between these two policies:

1. The ASU policy will pay out for only 12 or 24 months depending on which policy you take where the Income Protection policy could end up paying for a much longer time for long term sickness or accidents

2. The other main difference is an ASU policy covers for Unemployment where an Income Protection Policy does not

No. Income Protection does not cover you for Unemployment, only accidents and sicknesses

You choose the deferred period by asking yourself if you were off work sick how long would you be able to maintain your lifestyle before you start needing financial help. If your work pays you full sick pay for 3 months, then you go to statutory sick pay after that then it would be a clever idea to have a 3-month deferred period. If you are employed or self-employed and do not get any income at all and do not have any savings it would be a wise idea to have a policy which pays out from day one.

The deferred period is the period between you being off work and the start of the payments from the policy, for example if you have a 4-week deferred period on your policy it means you will have to be off work for 4 weeks before your benefits start paying to you. You choose the deferred period before you start the policy.

There are many insurance providers who offer Income Protection. Legal and General, Royal London and AIG are only some of them.

This has many variations and the cost for you individually would vary. The monthly premium for a 30-year-old man, a non-smoker who works in an office earning £30,000 per year who would like £850 of cover per month for 25 years with a deferred period of 3 months would cost him £11.28 (premiums quoted on 06/06/2018).

You make a claim when you have an accident or become sick and you know you will be off work for longer than the deferred period you have set up. For example, if you have a deferred period of one month (so the insurance company does not pay until one month has passed) they then start paying you the monthly benefit after one month either until the policy term ends or you return to work. There are differing lengths of deferred periods typically one, two, three, six or twelve months. The longer the deferred period the lower the monthly premium. There are policies out there which pay out without any deferred period so ask you adviser which one suits you.

It is designed to pay a monthly benefit to someone if they are unable to work because they have an accident or become ill. The policy is designed to pay out either until the term of the policy ends or until you are well enough to return to work. There are several options which you can have when you set the policy up. You can be insured if you are unable to return to your own type of work, “own occupation” or for “any occupation” there are other options and I would recommend you speak with one of our specialists to get the right cover for you.
It is worth noting that the insurers do charge more for particular jobs, such as people who work over 30 feet, por people who drive more than 20,000 miles per year. It is worth while asking our independent advisers as some providers don’t charge more for various types of jobs.

Income protection can be taken by employed and self-employed people

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