What is Income Protection insurance?

If you found yourself unable to work due to illness or injury, what would happen to you and your loved ones? Would you be in a position to cover your outgoings, such as rent, mortgages and utilities?  

 Income Protection is a policy that offers a safety net in instances such as this, and is designed to pay out a percentage of your annual income in the event that illness or injury results in a loss of earnings.

 

Who is Income Protection benefit for?

Income Protection policies are designed for those who are looking for comprehensive cover with a flexible choice of options. If you are seeking protection against a loss of income in the event that you are incapacitated and unable to work, this policy could be for you.

Ultimately, Income Protection is a safety net that anyone could benefit from. This cover is strongly recommended, however, if your employment situation does not offer considerable protection if you find yourself unable to work.

Realistically speaking, few employers offer to support their employees for more than 12 months if they are off sick from work, and many employers actually offer no sickness benefit at all. In this instance, employees would receive Statutory Sick Pay alone.

An Income Protection policy also comes highly advised for those who are self employed.

 

How does it work?

 An Income Protection policy will pay out a percentage of your income (around 50% to 70% is standard) after a specified ‘waiting period’ following on from an illness or injury. It’s up to you to set the parameters for this waiting period, which can be anything from one to twelve months. Once this period is up, you will begin receiving your benefit. Generally, the longer you opt to wait, the less you will pay for your policy.

 You can opt for either a short-term or long-term policy. Short-term policies will provide cover for 1 or 2 years. Long-term policies are designed to cover you for as long as is required, until you are able to return to work or until you retire.

 IP benefit currently pays out tax-free income, although this is always subject to change.

 

What if I am unemployed?

 In order to take out an Income Protection policy, you must be working 16 or more hours per week. You cannot, therefore, take out Income Protection if you are unemployed.

Should you become unemployed whilst you have the policy, you will still be able to claim if you become ill or injured, as long as you chose to continue paying for your policy after you became unemployed.

 

How much does it cost?

 There is no set price for Income Protection and your policy will be calculated against a number of factors. Your health, whether you are a smoker, your job and what level of cover you require will all impact your premium.

 

How can The Mortgage Brokerage help?

 Income Protection Insurance can offer incredible peace of mind, providing you with security in the event that you are unable to work for a prolonged period of time. However, Income Protection is not the only option on the market, and you may be wondering whether or not it is for you, and where to begin with exploring this product.

Here at The Mortgage Brokerage, we can help to create a clear picture of your options and advise you on what sort of policy is best suited to your circumstances. Our fantastic advisers will work hard to ensure that you secure an insurance policy that meets your needs and leaves you feeling secure.