Income protection insurance

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What is income protection insurance?

Income protection insurance will provide you with financial support if you find yourself unable to work, due to accident or illness, or if you're made redundant. You can get short-term or long-term policies, depending on your needs.

Do I need it?

You might have savings to fall back on, an adequate company redundancy package, or company sick pay that’ll cover illness in some circumstances.

But unemployment protection will help you to maintain your lifestyle and pay the bills if you can’t rely on these, either in the short or long term.

Bear in mind though that it’ll only cover a percentage of your income that you specify when you take out the policy, up to 70% of your salary.

Short-term or long-term income protection?

Long-term unemployment protection typically covers you for illness or injury. It pays out until you can work again, or until you retire, die or the policy ends.

Short-term income protection can also cover involuntary redundancy, but will only pay out for a set period of time, such as 12 months.

income protection

Insurers paid out over £604m for income protection claims in 2017

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insurers paid out £604,748,000 in income protection claims according to the Association of British Insurers (ABI) in April 2018

Types of income protection insurance

There are several options when it comes to choosing your income protection policy – you need to think about what you need from yours and pick the right type.

Accident and sickness

Covers you if you if an illness or injury prevents you from working. You won’t be covered if you’re made redundant though.

Unemployment only

You’ll only be covered if you’re made involuntarily redundant. This won’t provide any cover if you’re dismissed or leave your job voluntarily, or if you’re ill or injured.

Accident, sickness and unemployment

This is the most comprehensive type of unemployment protection, giving cover for voluntary redundancy, illness and accidents that prevent you from working.

Find out more

Guaranteed policies

If you want the peace of mind that your premiums will always stay the same unless you increase your cover, choose a guaranteed policy.

Reviewable policies

Reviewable policies might have cheaper premiums at the outset, but your insurer will regularly review your policy, so they could increase over time.

Age related policies

Age-related policies have premium increases in line with your age, but they aren’t affected by your lifestyle or occupation.

Alternatives to income protection

  • Payment protection insurance

    For private use, like visiting friends and family and doing the shopping, but not commuting.

    Payment protection insurance

  • Mortgage payment protection

    This can cover your monthly mortgage payments if you can’t.

    Mortgage payment protection

  • Loan protection

    You can get this type of income protection to pay your monthly loan repayments.

    Loan protection

  • Accident, sickness and unemployment insurance

    Protection for times when you can’t work because you’re too ill or injured, or you’re made redundant.

    ASU cover

Could your savings cover you for long if you were out of work?

Compare income protection

Frequently asked questions

  • Depending on the type of policy you pick, income protection could cover you for accidents, sickness and/or unemployment, whether you’re in regular employment or are self-employed. If you don’t make a claim, you don’t get a pay out at the end of your policy.

  • After you’ve made a claim, your income can either be paid out straight away or after a set amount of time, such as after your workplace sick pay runs out (it doesn’t affect your sick pay). Your income will be paid, tax-free, until you get back into work or for however long the term lasts.

  • Think about how long you might need a policy to pay your wage and how much of your wage you’d like to be paid. Most insurers will only pay out up to 70% of your annual wage.

  • This depends on various things like your age, smoker status, income needs and length of cover. For a personalised idea, get a quote from us.

  • Yes, as you may need different policies to protect different things, for example, payment protection insurance (PPI) and mortgage protection cover. Remember that the benefit amount you receive from your income protection will be reduced, depending on the compensation you get from other policies.

  • Yes, some insurers allow contractors or company directors to pay for their income protection insurance as a business expense.

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