What's income protection?
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.
It's easy to compare income protection insurance
One search is all it takes to compare income protection insurance (IPI) policies, with a helping hand from ActiveQuote.
There are three cover options available for income protection insurance so you'll be able to take your pick:
- Accident and sickness only
- Unemployment only (redundancy insurance)
- Accident, sickness and unemployment cover (ASU)
Income protection insurance can pay out up to 70% of your gross annual income and you choose how much you want to cover. Bear in mind that your premiums are going to be higher if you want to protect the full 70%.
There's also the option of looking at cover for employment benefits in kind (P11D benefits) such as private health insurance or a company car.
But to be honest, if you're looking to cover 70% of your income and/or P11D benefits, your choice of insurers will be limited.
- The deferred or wait period is how long you have to wait before a policy pays out. This could be from back-to-day-one to 112 weeks
Providers take certain information into account when deciding your premium, such as:
- The number of hours you work
- How long you've been in continuous employment
- Your occupation
- Residential status
- Whether you use tobacco and/or nicotine products (including cigars, cigarettes, chewing tobacco, pipes and nicotine replacement products such as e-cigarettes or 'vapers')
It's really important that you're as accurate as possible with the details you provide as mistakes or omissions may invalidate the policy.
Types of income protection insurance
You're spoilt for choice!
- Policies can offer cover for 'own occupation' (if you can't do your specific job), 'suited occupation' or 'any occupation' (if you can't do any job)
After you've chosen the cover option you need, you'll be able to decide what type of income protection policy you want.
The different types include:
- Guaranteed policies - the amount you'll pay will always stay the same - guaranteed! Oh, unless you decide to up your cover in which case your premiums will go up - sorry
- Reviewable policies - your insurer will review your policy regularly, so your premiums might increase year on year
- Age-related policies - premiums will increase yearly in line with your age. But they're not affected by lifestyle or occupation so it suits those who are a bigger risk to insure
Income protection insurance products
If you have regular outgoings for your mortgage or loan repayments, there are products which will specifically cover these payments for you, should you find yourself unable to work.
These can include:
- Payment protection insurance (PPI) - it's got a bad reputation due to mis-selling in the past but it's actually a legit way of covering your loan repayments or minimum credit card payments
- Mortgage payment protection insurance - does what it says on the tin - covers your monthly mortgage payments
- Loan protection insurance - no prizes for guessing this one - it pays your monthly loan repayments
What are the odds?
- The average claim paid out for income protection insurance in 2016 was nearly 18,000
- 84.7% of claims were paid out
We've got an abundance of income protection insurance guides nestling in our Income protection library to help you out if you want to know more.
Our guides can help with the basics such as whether you need IPI, the impact on state benefits, typical exclusions and the factors that impact on the premium price.
Delve deeper into the different types of products and find more information on areas such as terminal illness cover, lump sums at death, waiver of premiums while incapacitated and support for rehabilitation.