Income ProtectionWhat is income protection?An income protection policy supports you financially by providing a regular income if you are unable to work. It is different from Critical Illness Cover, as this only pays out if you contract one of a list of specified illnesses, and usually pays out a lump sum. Income protection pays out for the period of time you are unable to work, and most insurers will let you make as many claims as you are eligible to make. Why do I need income protection?You cannot rely on the government to cover your mortgage payments if you cannot work. There are no benefits paid for mortgages taken since October 1995 for the first nine months of unemployment or disability. Existing borrowers can only receive benefits if they qualify for Income Support. Income protection usually covers a wide range of conditions that can prevent you from working, such as mental illness (like stress and depression), musculoskeletal problems (including back pain), heart disease and cancer. What are the chances of you needing to claim on your income protection? These are just a few of the statistics published by the British Heart Foundation, the Imperial Cancer Research Fund, and the Mental Health Foundation. These facts are not included to be overly morbid, they are simply here to help you make an informed decision about how you can protect yourself and your family.
What types of income protection policies are there?There are many different income protection policies on the market, with different options which you can choose to define your own policy, as shown here. We can help you to work out what you need your income protection to do for you, helping you to make the best choice. How would you define “unable to work”?Income protection provides a regular income if you are “unable to work”. You can choose a policy based on one of three main definitions of “unable to work”:
Would you be prepared to do another, perhaps less pleasant job, if you became unable to do your own job? If so, you reduce the likelihood of needing to make a claim and are likely to have lower premiums. However, if you wouldn’t like to take just any kind of work you are capable to do (and the possible salary cut that could result) then you could decide to take the middle option. Bear in mind that if you are unable to do your own job, then you more than likely would need the same capabilities to take a similar job – so you may choose to define “unable to work” as “unable to do your own job”. This would most likely result in higher premiums. Guaranteed/reviewable premiumsMost policies have guaranteed premiums throughout the term of the policy. Some insurers require reviewable premiums which means that you pay more each year in line with the company’s claims record. In this case payments may be lower to start with but will only get higher. Deferment PeriodIncome protection providers will start to replace your income after a waiting period of your choice, called the deferred period. Usually the longer the deferred period, the lower the monthly premiums are. (TOMS tip?? If you are employed, check your contract to see if your company automatically pays you if you are off sick, and for how long.) If you have savings that would cover your bills temporarily, you may choose to work out how long you would be prepared to rely on those for, and adapt your deferment period accordingly. ExclusionsThere are some exclusions to policies which could affect whether they would be suitable for you. Exclusions could be:
If you would want to be covered for the event of any of the above, we would try to help you find a policy that would suit your needs. What's next?Obtain a quote using our online services.
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