INCOME PROTECTION INSURANCE
Providing you with an income if you cannot work
Almost one million people in the UK find themselves unable to work due to a serious illness or injury each year.
Income protection insurance is designed to pay you a tax free monthly income if you cannot work due to ill health or injury. It can maintain your income until you get back to work, or reach your normal retirement age, whichever comes first. And with many policies, you keep your cover and can claim again if required.
How long would you be able to survive on savings, or on sick pay from work? What would happen if you are still unable to work once this runs out?
What is income protection insurance?
Income protection insurance (sometimes known as permanent health insurance) is an insurance policy designed to help you if you can’t work because you’re ill or injured.
It ensures you continue to receive a regular income until you retire or are able to return to work.
It replaces part of your income - if you can’t work because you become ill or disabled.
It pays out until you can start working again - or until you retire, die or the end of the policy term - whichever is sooner.
There’s often a waiting period before the payments start - you generally set payments to start after your sick pay ends, or after any other insurance stops covering you. The longer you wait, the lower the monthly premiums.
It covers most illnesses that leave you unable to work - either in the short or long term (depending on the type of policy and its definition of incapacity).
You can claim as many times as you need to - while the policy lasts.
With income protection insurance, its important to get the most appropriate policy which best suits your needs – advice from an independent financial adviser or broker can be essential.
It’s not the same as critical illness insurance, which pays out a one-off lump sum if you have a specific serious illness.
It’s not the same as short-term income protection, which also pays out a monthly sum related to your income, but only for a limited period of time (normally between two and five years) and can cover fewer illnesses or situations.
PROTECTION
Income Protection insurance literally insures your income against the risk of illness or injury that stops you working.
pay the bills
It replaces part of your lost income if you're unable to work because illness or injury. It can help pay the bills so you can focus on getting better.
lifestyle
Helps maintain your lifestyle, such as shopping choices, subscriptions, memberships, entertainment, and other basic nescessaties.
savings
Nearly 41% of people in the UK do not have enough savings to last more than one month without a paycheque
Do you need it?
Almost one million workers a year find themselves unable to work due to a serious illness or injury.
It doesn’t matter whether or not you have children or other dependants – if illness would mean you couldn’t pay the bills, you should consider income protection insurance.
You’re most likely to need it if you’re self-employed or employed and you don’t have sick pay to fall back on.
Check what your employer will provide for you if you’re off sick.
Who doesn’t need it?
You might not need income protection insurance if:
You could get by on your sick pay. For example if you have an employee benefits package which gives you an income for 12 months or more.
You could survive on government benefits. But they might not be enough to cover all your outgoings.
You have enough savings to support yourself. Remember that your savings might need to see you through a long period.
You could take early retirement. If you’re near retirement age, perhaps you could afford to retire early. If you’re unable to return to work you might be entitled to take your pension early.
Your partner or family would support you. Perhaps your partner has enough income to cover everything the two of you need.
How much does income protection insurance cost?
How much you pay each month will depend on the policy and your circumstances.
Usually income protection insurance covers a wide range of illnesses and situations and has the potential to pay out for many years.
The cost of a policy will vary based on a number of factors, including:
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age
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job
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whether you smoke or have previously smoked
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the percentage of income you’d like to cover
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the waiting period before the policy pays out
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the range of illnesses and injuries covered
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health (your current health, your weight, your family medical history).
Don't hesitate to contact us if you want to compare providers such as Aviva, Vitality, AIG, Liverpool Victoria and more.
We can give you professional unbiased advice on the best providers to suit your budget and needs.
Other types of insurance to consider
There are also other insurance products you can use to protect yourself if you’re ill or injured or if you die and you want others to be protected.
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Do you need life insurance? This product provides some financial support to your dependants if you die.
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Do you need critical illness insurance? This type of policy will provide you with a tax-free ‘lump sum’ if you’re diagnosed with a serious illness covered by your policy.
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Do you need short term income protection? This product will cover your essential outgoings if you can’t work for a short period of time.