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What is Income Protection Insurance?
It is an insurance policy that pays you a tax free monthly income should you be unable to continue working.
Why do I need Income protection insurance?
Even just a small amount of time off work can have devastating effects on your finances which in turn can effect your lifestyle.
Would you be able cope financially should you be unable to work due to an illness or disability?.
Most employees only pay sick pay for a short amount of time and then you will have to rely on state benefits.
Could you continue to pay any financial commitments you have such as a mortgage, loan, finance agreement?
You also have to consider your general living expenses such as groceries, household bills, petrol etc.
With income protection insurance you will receive a monthly income until your selected retirement age which is tax free and is usually between 50%-65% of your current income.
Is it the same as health insurance or Accident, Sickness & Unemployment cover?
Income protection Insurance is also known as ‘Permanent Health Insurance’ but is different from ASU cover (Accident, Sickness & Unemployment Cover).
Income protection is more of a long term insurance policy to protect your income should you suffer an illness or disability which prevents you from working.
Accident, Sickness & Unemployment Insurance or ASU cover is a short term insurance policy which covers you for accident, sickness and unemployment.
If you are looking for unemployment / Redundancy insurance then please click the following link: Unemployment Insurance
Can you give me more information about Income Protection Insurance?
Basically, Income protection insurance is a long term UK insurance policy designed to protect you from health related employment absence. It will not cover you for unemployment or redundancy.
The monthly income received will not be related to your mortgage or loans so it can be spent on what ever you like and you will not pay income tax on it.
If you receive full sick pay from your employer then you cannot make a claim until this income has ceased.
When setting up an income protection insurance policy you will have to agree a deferred payment time from when the policy starts to pay out. This can be 4,8,12 weeks for example but can also be set at a much shorter length if required and this deferred date can have an effect on the cost of your premiums.
The underwriting process for income protection insurance can be a little more complicated and stricter then an ASU cover(Accident, Sickness & Unemployment) policy and the insurance provider will sometimes require a medical report from your GP which is payable by the insurance company and you can view this report prior to it being sent to them.
Whilst this can be a little inconvenient and slow down the application process, your GP is providing the insurance provider full disclosure of your medical history and current state of health which will help to greatly reduce the risk of your claim being turned down should you make one.
What should I do now?
Simple, just click the button to fill in our quick, single page online quotation form for income protection insurance and we will do the rest.
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