Income Protection

You can set out the best financial plans but if you are struck down by a sickness and do not have sufficient resources in place they can be quickly undone. Savings can be quickly used and worse still you could be pushed into debt. 

The answer is to protect your income in the event of you suffering a long-term illness. This is a basic and under used insurance contract. Most people have life cover and fewer have income protection, yet you’re much more likely to be unable to work due to long term sickness than you are of dying.

Income protection basics

You can typically claim up to half of your income, some providers will go slightly higher. However, in the event of a claim the income is paid to you free of income tax and national insurance.

You get to choose when a policy will start paying benefit. This could be after 4 weeks, 8 weeks, 13 weeks, 26 weeks or 52 weeks. The longer you can wait before you need to claim the cheaper the monthly cost to you will be. You rely on your employer, your own savings or a combination of both to survive before the provider steps in and starts paying you.

You can choose how long the provider will pay you for in the event of a claim. This starts at just the first year of an illness providing breathing space financially. More comprehensive policies pay from the first point of claim until you are either well enough to return to work or until the end of the policy. The policy end date is set by you and could match the end of a mortgage, your retirement date, the age at which you think your children will be financially independent or any other age that works for you. The longer you want the potential benefit to pay for the higher the cost of insurance.

Claims processes can differ depending on the provider. Some will say “working task” meaning you would have to pass and incapacity style test. Some will say you have to be unable to perform “any occupation” meaning you must be too ill to work in any job to be able to claim. The best policies offer “own occupation” as the form of claims assessment meaning if you’re to ill to perform your own job the insurer will pay out a claim.

Finally watch how the premiums may change over the life of the policy. The cheapest from the outset are age rated policies. These providers will increase the monthly cost to you as you get older. The alternative are level premiums which means once agreed the provider will not increase the monthly cost based on your own personal circumstances. Both these options come in reviewable and guaranteed formats. Guaranteed means you will know exactly where you stand from the outset in terms of how the premiums will change. Reviewable means the provider reserves the right to review the costs based on national patterns of claims, this could see the costs increased over time.

Income protection can be very affordable. With so many options advice is important. Our aim is to guide you through these options and obtain for you the best value cover to fit your personal budget from the whole of the market. We offer a free initial consultation so all you have to do is give up some of your time to see how affordable this insurance can be.