Based on individual with annual salary of £40,000 with 3% pension contribution.
Cost of Living based on Office for National Statistics 2019 report
SSP = Statutory Sick Pay
IP = Income Protection
Help to cover your bills when you need it most
Income protection is an often overlooked option when looking to protect your income against ill health and disability. Unlike Critical Illness cover Income Protection insurance (also known as PHI - Private Health Insurance) pays a percentage of your salary should you be unable to work due to ill health or disability. For many people this type of cover can be more appealing as it will pay out for a broader range of health issues than critical illness, which covers specific named illnesses as defined in its policy schedule.
At Life Cover Direct we can help you find the best Income Protection policy for you and will help guide you through the different options. We've put together a summary below for you, if you have any questions or would like to get a quote please don't hesitate to contact us, we'd love to hear from you!
What is Income Protection?
In a nutshell Income protection insurance provides a monthly income should you not be able to work due to a long-term illness or injury which results in a loss of earnings. This insurance pays out until you return to work, retire, die or your plan ends, whichever happens first.
The amount paid out each month is usually a fixed percentage of your salary or income.
What does it cover?
It covers most illnesses that leave you unable to work - either in the short or long term (depending on the type of policy and its definition of incapacity). It can be used to pay for anything you wish but typically is used to maintain mortgage commitments and everyday living costs like groceries and other household bills.
Some employers will continue to pay your wages for up to 6 months if you fall seriously ill. However this is not a mandatory requirement, in the UK the statutory sick pay amount is £95.85 per week for up to 28 weeks. After this period your employer is not obliged to pay you anything.
How long does it cover you for?
Depending on the insurer an income protection policy can run to your retirement age or as short as 5 years.
If you make a successful claim there is usually a deferred period before the policy starts paying out the cover. This is usually set up to start after any sick pay from your employer ceases.
If you are concerned about your household finances should you not be able to work then Income protection insurance is something you should consider taking out. Get in touch and one of our friendly advisors can help answer any questions you may have and provide you with the best quote for your needs.