What is income protection?
Income protection insurance covers you for illnesses and injuries that leave you unwell and unable to work. Policies can be tailored to start after your sick pay and pay out a set monthly amount.
Will the policy pay out forever?
Income protection policies can be tailored to a comfortable monthly budget for you. Short term policies normally cost less to put in place. Long term policies will pay out until you can return to work, so if you cannot return to work the income protection would pay out monthly until you retire and receive your pension.
What if I can’t work?
Income protection will pay you a regular income, whether you’re employed or self employed usually at a rate of 60% should you fall ill, suffer an injury or are unable to work.
If you are self-employed, some policies may cover your fixed overheads such as home or business costs.
Fracture cover can also be added on to some income protection policies. This is also a popular choice for self-employed people who play sport and at higher risk of injuries.
How much does it cost?
The cost of the policy will depend on how much cover you want to put in place and how quickly it pays out. You will also complete a health questionnaire based on your current and historical health. The main personal factors that affect the cost are things such as your age, BMI, any previous medical conditions and family health history.
Do I need Income protection?
The simple answer is that if you require your monthly income to pay the household bills and living costs then you do require income protection cover. The protection policy you put in place is often dictated by the amount you can afford to pay each month.
If you are unwell or injured and you cannot work your sick pay will pay out. Most sick pay only covers you for full pay for a very short period of time. Statutory Sick Pay is only £99.35 per week so most people couldn’t pay their bills with this small amount of income.
The cover pays out the monthly agreed amount so that you can keep up with your bills and living costs.
Self-employed people won’t have any sick pay in place so they will often require the cover to start faster
“As with all insurance policies, conditions and exclusions will apply”