Income Protection

Essentially income protection is a policy that functions like sick pay.  If you’re too ill to work, it pays out a monthly tax free income.

Unlike critical illness cover, there are no specific definitions you have to meet in order for the policy to pay out.  All that is required is your doctor confirming you’re too sick to work.  Additionally, most policies are organised on an “own occupation” basis, meaning you’re unable to do your specific job. For example, a surgeon may damage their hands in some way, they could still likely get another job, even in an entirely different industry, but because they can’t do their specific line of work the policy would pay out.

Policies are set up to cover a specific term, usually until your estimated retirement age.

They will payout for the entire policy term or until you’re well enough to return to work, whichever comes first.  This is the main advantage over traditional sick pay provided through your employer, which will usually only last a matter of weeks or months.   

Providers are normally happy to cover around 50-60% of your gross earnings, but since the benefit is paid out tax free it should work out to be fairly similar to your regular earnings.

To answer if you need income protection you should assess a number of factors such as:

  • How long could you last if your income were to stop?
  • How long does your sick pay last with your employer?
  • Are you self-employed and have no sick pay at all?

Statistically speaking the average amount of time a claim lasts on an income protection policy is 7 years.  Very few of us would have sufficient savings or other sources of income to comfortably support ourselves for this length of time.  

None of us ever want to think about a scenario where something so terrible happens that leaves us unable to work again, but ultimately this can and does happen.  If an event like this happens, financial worries should be the least of your concerns so you can focus on getting better.  Appropriate protection is the key to ensuring this. 

Arranging Income Protection

For starters, the advisers we put you in touch with do not charge any fees for arranging protection business as they will receive a commission from the insurer.

They can carry out medical research before you even apply, so if you have any pre-existing conditions or medical history you have concerns about, the adviser can research this for you in advance to see how it would affect your cover.  

They’re completely independent, meaning they can check the whole market for you.  If it’s a policy where cost is most important they can find the cheapest deal.  Alternatively, for some policies, quality of cover is important, so they can help you find the best option that is still comfortably affordable for you.

They can tailor a specific package to suit all your needs, finding the best parts of various providers and putting them all together in one place for you.

For more information or to speak to one of the advisers we work with, please contact us.