Income Protection Insurance- Your Guide

Essential protection in a rapidly changing world

What is Income Protection cover?

Unlike Critical Illness Cover, or Life Insurance which pays out a ‘one-off’ lump sum if you are diagnosed with a serious illness, or if you die, this type of cover provides an income if you are unable to work due to accident or sickness.

A lifeline during a time of financial worry, income protection will pay you a tax-free regular income that represents part of your take home pay until you are back on your feet and well enough to return to work. It acts as a backup when you have exhausted sick pay payments from your employer and any state benefit you receive .

The other benefit of income protection cover is that you can claim as many times as you need to throughout the policy term. One thing to remember though, is that there is often a waiting period before payments kick in, however this keeps your monthly premiums low.

Do I need Income Protection Insurance?

There has never been a more uncertain time in the UK today and we cannot take our health for granted. Having a policy in place that will cover you if you fall ill or have an accident, will give you peace of mind if the worst happens.

Whether you are single with no dependents, live with a partner and have dependents, if you won’t be able to pay your bills then, income protection is for you.

What to think about before buying Income Protection Cover

It’s important to be informed about your own personal circumstances before talking to a protection adviser about taking out Income Protection Insurance. Here’s a checklist to help you:

• How much income you would need to survive on to pay all your monthly outgoings.Remember to include food and other necessary purchases as well as your monthly direct debits.
• What savings do you have and how long would they last if you used them to support you.
• Check your employee benefits package to find out how long you are covered for if you fall ill and how much sick pay you will receive.
• Would your partner or family be able to support you if you lost your income?
• Is early retirement an option?

This will give you an understanding of how much cover you would need, and how long you could wait until the payments from your policy would start.

Once you have all your facts together it’s time to talk to a protection adviser. We have access to a range of income protection providers and can help you choose one that ticks all your individual boxes.

We can also guide you in deciding whether you would benefit from other types of protection, such as Life Insurance and Critical Illness cover.

How much does Income Protection Insurance Cost?

As with other types of protection products, the cost of income protection cover is dependent on your own set of personal circumstances and the policy you choose.

Some policies cover more illnesses than others, and their pay out conditions will differ, such as the amount of time you are prepared to wait before the policy pays out.

The cost of your policy will also depend on your age, the type of job you do, whether you smoke or not, your weight and your medical history.