Income Protection

Income Protection pays out a regular benefit to supplement your income if you are unable to work due to illness or injury.

Income protection supports the important things in your life

Income Protection pays out a regular benefit to supplement your income if you are unable to work due to illness or injury.  Policies can be set up to run alongside your sick pay arrangements through work.

 

If you are self-employed you may not have any sick pay arrangements and would have to rely on savings in the event you are unable to work. Income Protection can be a lifeline, to support maintaining your bills and lifestyle costs.

When you’re ill or injured and can’t work

Income protection provides a safety net to help your finances such as mortgage or rent payments, bills, and daily living expenses.

 

Losing your income can have a big impact on your lifestyle. Income protection offers a regular income to cover essential costs and allows for those little luxuries.

 

Knowing that you have income protection provides peace of mind. You’ll be financially protected if you suddenly become ill or have an injury. One less thing to stress and worry about.

How does Income Protection work

  1. You are unable to work due to long term illness or injury, and are signed off work by your GP or other medical professional.
  2. You make a claim directly with the insurer, who may require you to provide a GP sick note.
  3. The insurer will start paying your monthly benefit after the policy deferred period has been reached.
  4. Your policy will pay out until you return to work or until the policy pay out claim length.

More about Income Protection

Income Protection insurance pays an agreed monthly benefit if you are unable to work due to long term sickness or injury. This can be particularly useful if your employer does not provide an adequate sick pay scheme.


The monthly benefit can be used to help to maintain your lifestyle and make sure that your financial commitments such as mortgage and bills are paid.

 

You can receive up to 70% of your regular (pre-tax) monthly income depending on the plan that you take out.


If you are unable to work due to sickness or injury, you may only be entitled to Statutory Sick Pay (SSP), therefore an Income Protection plan can supplement an income until you are able to return to work. If you do not have an Income Protection plan in place you may have to rely on savings to cover living costs while you are unable to work.

 

Income Protection insurance is very beneficial if you are self-employed and do not have a sick pay scheme.

Yes. The amount of benefit you are allowed to take will be based on your annual income. You may be required to prove your annual income during the application process.

 

You will also need to complete a medical and lifestyle questionnaire as part of the application and disclose any dangerous or hazardous activities you are required to do as part of your job.

  1. Deferred Period
    The deferred period is the length of time between being unable to work and when the insurer will start paying the monthly benefit. Deferred periods can range from as soon as 1 week up to 12 months. As an example a policy with a 4 week deferred period will commence payments once you have been off work for a period of 4 weeks.

     

    How long the deferred period should be will be determined by a number of factors, for example, does your current employer offer any additional sick pay benefits, do you have any other sick pay arrangements, how long you can survive with reduced income, do you wish to use any savings. Typically the longer the deferred period is on the plan the cheaper the monthly premiums are.

     

    Claim length
    You can choose a plan with either a short or long term claim length.

     

    Short-term income protection is designed to cover you should you be unable to work due to injury, or long term sickness. The period of claim is for a fixed amount of time, usually one, two  or five years.

     

    Long-term income protection is designed to cover you should you be unable to work due to injury, serious or terminal illness. Pay-outs will continue until you return to work or when the policy expires – usually when you reach retirement, or at the end of a fixed period.

     

    Amount of benefit
    Dependent on the insurer, you are able to cover anywhere between 50% to 70% of your income.

     

    Waiver of premium
    With waiver of premium you won’t have to pay your policy premiums during periods when the income protection policy is paying you benefits.

     

    Premium Basis

    • Guaranteed premiums – the monthly premium cost will remain the same throughout the term of the policy.
    • Reviewable premiums – the provider may increase the monthly premium cost during the term of the policy. Providers will review your premiums periodically, although typically most providers will not change the premiums within the first 5 years.
    • Age-costed premiums – the monthly premium will increase every year at the start of the year or on the anniversary of the plan or your birthday (provider dependent). The rate of increase is dependent on the level of benefit, your age, and your chosen deferred period.

ou can choose a plan with either a short or long term claim length.

 

  • Short-term income protection is designed to cover you should you be unable to work due to injury, or long term sickness. The period of claim is for a fixed amount of time, usually one, two or five years.
  • Long-term income protection is designed to cover should you be unable to work due to injury, serious or terminal illness. Pay-outs will continue until you return to work or when the policy expires – usually when you reach retirement, or at the end of a fixed period.

Experience you can trust

Speak to us to discuss your requirements and the options available, book a call (no obligation) to speak to one of our advisers here.