What is Income Protection?
Income protection provides a regular monthly income in the event of you being unable to work due to accident, injury or illness and continues until you are able to return to paid work or you retire.
How much monthly cover can I take?
Providers have limits on the amount they are willing to cover you for but this is normally up to 50% of your annual income, paid out on a monthly basis.
For example: If you earn £50,000 per annum, you could cover yourself up to £25,000 per annum and therefore receive £2083 per month.
However, this will be aligned to your preferences, requirements and budget.
Will the cover vary depending on my job role?
Income protection has different levels of cover relating to your inability to work; these fall into two common categories:
Own occupation: this is the highest level of cover. If you are unable to carry out any aspect of your own occupation, the policy would pay out,
Suited tasks: this cover will pay out if you have transferable skills and are still able to work in a different occupation.
What is a deferred period?
A deferred period is the length of time you are unable to work before the policy starts to pay out. As an example, a policy with a four-week deferred period will kick into effect once the policy holder has been unable to work for four weeks. Deferred periods can range from day one up to a full year.
Personal savings and how much sickness pay you receive from your employer are factors to consider when choosing the length of the deferred period on an Income Protection plan. The longer the deferred period, the cheaper the premium.
What are guaranteed premiums?
These are premiums that will not change during the term of the policy regardless of interest or cost of living increases.
Are there additional benefits in an income protection policy?
Often, income protection providers will have additional benefits to help you ‘back to work’. For example, counselling, physiotherapy and other rehabilitation therapies to support you in your recovery.
What is Waiver of Premium?
In the event of you being unable to work due to accident, injury or illness, you may struggle to keep up your repayments on your policy which could compromise your cover. Waiver of premium ‘waives’ any premiums during the period you are unable to work to ensure you are still covered.
