Your Financial Safety Net Explained

Income protection insurance is a type of insurance policy designed to provide you with a regular income if you are unable to work due to illness, injury, or disability. These should be part of any protection plan but especially for the self employed who, if they cannot work effectively have no income. There are many factors that affect the price of these policies so speak to us so we can get you a tailored quote.

Here are some key points about income protection policies:

  1. Purpose: The primary purpose of income protection insurance is to replace a portion of your income when you are unable to work due to medical reasons. It ensures that you can continue to cover essential expenses such as mortgage or rent, bills, and living costs.
  2. Coverage: Income protection policies provide coverage for a range of medical conditions, disabilities, or injuries that prevent you from working. The coverage may include both short-term and long-term disabilities.
  3. Benefit Amount: When you make a valid claim, you receive a monthly benefit payment, which is usually a percentage of your pre-disability income. The benefit amount can vary based on the policy terms and your chosen coverage.
  4. Waiting Period: Income protection policies typically have a waiting period (also known as the “deferred period”) before benefit payments begin. This waiting period can range from a few weeks to several months, depending on the policy. You can often choose the waiting period when you purchase the policy.
  5. Policy Term: You can select the duration of your income protection policy, which is often referred to as the policy term. Policies can be short-term (e.g., one or two years) or long-term, providing coverage until a specified age, such as retirement.
  6. Occupation Class: Your occupation or job type can affect the terms and cost of your income protection policy. High-risk occupations may have higher premiums or different coverage conditions.
  7. Premiums: You pay regular premiums to maintain your income protection policy. Premiums can vary based on factors such as your age, health, occupation, and the level of coverage you choose.
  8. Exclusions: Income protection policies may have exclusions, which are specific situations or conditions not covered by the policy. It’s essential to understand these exclusions when purchasing a policy.
  9. Rehabilitation and Return to Work Support: Some income protection policies offer rehabilitation and return-to-work support services to help you recover and get back to work as soon as possible.
  10. Tax Benefits: In the UK, income protection benefits are typically tax-free, meaning you won’t be liable for income tax on the payments you receive.