What is Income Protection?

Income Protection insurance pays a regular income when you are unable to work due to injury or illness. Individual policies typically pay a tax-free income after a specified period of being unable to work, either for a short term, such as one or two years, or until you retire. Most policies will pay out after being unable to work for 3 or 6 months, but this can be shorter or longer, with some plans paying out after just a week.

– How it works?

You pay a monthly premium and if you are unable to work and meet the terms and conditions the insurer will pay a regular income until you either return to work, pass away or the policy ends.

– What are the main options?

You will need to think about how much cover you need, how long you can survive financial without your income, how much income you currently receive if you are ill and how long for, how long you want to be covered for and whether you would like the cover amount to increase annually or stay the same.

– What does it cost?

The cost will depend on your individual circumstances and could start from as little as £5pm depending on how much cover you need. Other factors that could impact the price including your occupation, hobbies, health and the policy options you choose, such as how long you wish to be covered for.

– How does it compare to other insurance products?

Although the might sound similar Income Protection is not the same as PPI (payment protection insurance). There are a number of differences including that IP is fully underwritten, is not directly linked to a specific debt, can have fixed premiums throughout the life of the policy, and historically has paid over 90% of all claims.