Independent Insurance and Health & Protection Advisors 
01234 419999 
Like most of us, you probably rely on the regular income from your work to pay your bills. 
If you're unable to work because of injury or illness, you could face some worrying times. One option to give you peace of mind is income protection insurance
What is income protection insurance? 
Income protection insurance provides payments if you are ill or injured and are unable to work. You should check what’s covered because some things might not be included. Ask about pre-existing medical conditions and illnesses you or your family members have had in the past, for example. Some policies will include both your physical and mental health. 
Long-term policy payments will continue until you can return to work or until your retirement or death if you can’t return to your role. Short-term income protection policies are also available that provide payments for one, two or five years, and these will cost less. 
Income protection insurance won’t provide payments if your role is made redundant. It’s different to critical illness insurance, which provides a lump sum if you become seriously ill, or life insurance which provides a payment if you die. Nor is it the same as payment protection insurance that covers loan or finance agreement payments, and which has been notoriously mis-sold in the past. 
How does income protection work? 
Income protection replaces part of your income if you're unable to work because of illness or injury. Your insurer will define what ‘inability to work’ means and this could affect whether you will receive payments and when. This is something you will need to consider carefully when looking at an income protection policy. 
Your premiums are affected by your job, your health, and the payments you will need if you make a claim. 
Whether you’re a smoker, for instance, will be taken into consideration. The type of job you do is important because insurers assess how much risk is involved and how likely you are to be ill or injured. For example, they might have categories for: 
managers and administrators 
roles which involve high business mileage 
skilled and semi-skilled manual roles 
heavy manual and unskilled roles 
If your job is risky you are more likely to make a claim so your premium will be higher. If you are involved in hobbies or sports which could be risky, these might also be considered. 
What would my payments be if I made a claim? 
Income protection payments are usually based on a percentage of your earnings and would typically be from 50% to 70%. A higher percentage might be paid on the first £40,000 or £50,000 of your salary with a lower percentage above that level. 
For example, if you earn £40,000 per year and have an income protection policy that will provide 60% of your salary you would receive £24,000 in the course of a year, which is not taxable. 
You should confirm what your employer would pay if you’re unable to work and for how long, so your payments can keep step to maintain your overall income. 
When will I receive payments? 
Income protection policies provide payments after a pre-agreed time. Typically, this will range from between one and 12 months after you make your claim. Some policies pay after a week or can be back dated to day one of your illness or injury. Premiums for this type of policy will be higher. A longer 'deferral' period will reduce your premiums. 
Should income protection be 'index-linked'? 
Inflation can affect the value in real terms of the payments you receive, so index linking your income protection insurance policy can help your payments keep pace. 
When you are working your income should increase to cover the rising cost of living. Your income protection policy pays a proportion of your current salary. If your policy doesn’t take future price rises into account, it will be worth less over time. 
You can link your insurance with inflation based on the consumer prices index (CPI) or the retail prices index (RPI). This will help to maintain your payments and will be reflected in your annual premium. 
Will income protection affect any benefits I can claim? 
Income protection payments are treated as 'unearned income' and will be taken into account if you claim Universal Credit, for example. 
Visit the 7 Families charity campaign page to find out more about the financial impact of long-term illness. 
Please get in touch if you would like to discuss income protection insurance. 
Vida Insurance Advisors is a trading style of N and J Health & Protection Ltd, an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales no. 12657007. Registered Address: 23 Russell Avenue, Bedford, Bedfordshire, United Kingdom, MK40 3TD 
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