Protect your income
With access to providers from across the market, we can provide you with bespoke advice on protecting your income to ensure that you have the right policies in place at the right price.
Your income protection policy will be there to protect you and your family if you are unable to earn your normal income due to an accident or long-term illness.
Income Protection is an insurance policy that pays out if you’re unable to work because of injury or illness. The policy usually pays out until retirement, death or your return to work, although short-term income protection policies, which last for one or two years, are also available at a lower cost.
When to consider income protection
People should consider income protection because only a minority of employers support their staff if they are off sick from work for more than a year. Given the low level of state benefits available, everyone of working age should consider a plan to provide an income.
“If there is one insurance policy that every working adult in the UK should consider – it’s the one most of us don’t have – income protection.”
Income protection pay-outs are usually based on a percentage of your earnings: 50% to 70% is the norm. For example, if you earn £40,000 a year, take out an Income Protection policy designed to pay out 60% of your salary. Your policy will pay out £40,000 x 60% = £24,000 a year. Benefits may be reduced if you receive other regular income, such as salary or pension. The payment of any other payments i.e. sick pay, may have an impact on the benefits payable. The good news is that payments from Income Protection policies are made free of income tax.
Income protection policies
Income Protection policies pay out only once a pre-agreed period has passed, generally ranging from one to 12 months after you put in a claim. The longer the ‘deferral’ period you choose, the lower your premiums. The default deferral period tends to be 13 or 26 weeks, but it can sometimes be as low as one week.
Income Protection insurance for the self-employed is one of the most important insurance policies to consider. When you become self-employed you no longer have access to insurance cover provided by an employer. Therefore, if you become ill or have an accident and are unable to work then your income would cease or be severely reduced.
For more information or to discuss the income protection policies available to you, to protect you and your family, please get in touch.
*Please note: Income Protection plans typically have no cash in value at any time and cover will cease at the end of term. If premiums stop, then cover will lapse.