What is income protection insurance?
Income protection is a type of insurance that replaces some of your income if you're unable to work due to illness or injury. Its regular payouts can help you stay afloat during turbulent times, allowing you to focus on getting better and back to work.
This could help you pay essential bills like your mortgage, rent, and other expenses such as utilities and food, enabling you to concentrate on your recovery.
Income Protection Insurance covers most illnesses and injuries that prevent you from working, either in the short or long term. However, it doesn’t pay out if you’re made redundant. Here’s how policies usually work:
- It replaces part of your income if you experience a loss of earnings due to illness or injury, rendering you unable to work.
- Income protection covers you until you have recovered or until retirement, death, your policy ends, or until the limited claim period on your policy ends – whichever is sooner.
- You can make claims as many times as you need to while the policy lasts.
How much does Income Protection Insurance cost?
There are several factors that can influence the monthly cost of your life cover. Below are some of the factors that providers will consider when calculating the cost of your policy:
- Job
- Age
- The percentage of your income covered
- Health
- Desired policy end date
- Waiting period before payments commence
- Duration for which each claim will be paid
Payments typically commence after the exhaustion of sick pay or when other insurance coverage ceases. The longer you wait for payments to begin, the lower your policy premium can be
How do I know if income protection insurance is right for me?
Some considerations before taking out a policy:
- What would happen if you got ill and couldn’t afford to pay the bills?
- If you’re employed, do you have sick pay to fall back on – and how long is this paid for? This may only be Statutory Sick Pay, which is just £109.40 per week.
- If you’re self-employed, what would you do if you couldn’t work due to illness or injury?
- Can you afford the level of cover you’ll need? You need to set premiums at an affordable level, but also make sure the policy will cover your bills if you do make a claim.
What’s the difference between income protection and critical illness insurance?
These are two very different types of cover. Income Protection Insurance pays a percentage of your gross salary as a regular payment until you can return to work.
Critical Illness Insurance provides financial assistance, usually in the form of a lump sum payment, if you're diagnosed with a critical illness covered by your policy. These policies typically do not pay out in the event of death and have no cash value at any time
Important information
For insurance business we offer products from a choice of insurers.