Income protection is a type of insurance designed to provide financial support if you are unable to work due to illness, injury, or disability. It helps to replace a portion of your income during a period of incapacity, ensuring that you can meet essential living expenses, such as mortgage payments, bills, and daily costs, when you are unable to earn a salary.
When you take out income protection insurance, you agree to a policy that pays a monthly benefit if you become unable to work due to illness or injury. The benefit is typically a percentage of your regular income, often around 50% to 70%. You can choose how long you want the payments to continue, such as until you recover and return to work, or until retirement age, depending on the policy.
Before the policy kicks in, there is usually a waiting period, known as a deferred period, which can range from a few weeks to several months. This means you may need to use your savings or other sources of income (such as sick pay) during this time before the insurance starts paying out.
Coverage for Illness or Injury
Income protection covers a wide range of conditions that might prevent you from working, including serious illnesses, accidents, mental health issues, and long-term medical conditions. Some policies also cover part-time or self-employed workers.
Flexible Benefit Levels
The monthly benefit you receive can be tailored to match your financial needs. Policies typically allow you to choose the level of cover, balancing the cost of premiums with the amount of income replacement you want.
Long Term Support
Unlike short-term disability benefits provided by employers, income protection can offer long-term security if your condition prevents you from working for an extended period, even for the rest of your career.
For many people, state sick pay or employer sick pay may not be sufficient to cover living expenses if they are off work for an extended period. Income protection acts as a financial safety net, providing a regular income to help you maintain your lifestyle and cover necessary expenses.
Income protection is an essential form of insurance for those who want peace of mind knowing that, if they are unable to work due to illness or injury, they will still have a source of income. It can be particularly valuable for self-employed individuals or those without comprehensive sick pay benefits.
If you have any questions regarding income protection please get in touch with our team of qualified financial advisers for a no obligation chat.
The earliest known life insurance policy was made in Royal Exchange, London on 18 June 1583. A Richard Martin insured a William Gybbons, paying thirteen merchants 30 pounds for 400 if the insured dies within one year.
Income protection policies typically cover between 50% to 70% of your gross income.
No there is an initial deferred period which can range from a few weeks to several months and which you can select when you set up the policy. Payments will begin after the deferred period until you return to work, reach retirement age of the end of the policy term.
Yes income protection is available to self-employed individuals, providing financial support if you are unable to work due to ill- health or injury.
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