Income protection cover is available for everyone
What's income protection?
Income protection insurance pays you a regular income if you can’t work because of sickness or disability and continues until you return to paid work or you retire. Income protection insurance is also known as permanent health insurance.
The amount of income you are allowed to claim will not replace the exact amount of money you were earning before you had to stop work. You can expect to receive about a half to two-thirds of your earnings before tax from your normal job.
This is because some money will be taken off for the state benefits you can claim, and also the income you get from the policy is tax free.
You can’t claim income protection payments straightaway if you fall ill or become disabled. You usually have to wait a minimum of four weeks but payments can start up to two years after you stop work. This is because you may not need the money straightaway as you may get sick pay from your employer or you may be able to claim statutory sick pay for up to 28 weeks after you stop work.
Insurers will look at your family medical history and some policies will cover existing medical conditions but others will not. If your family medical history means that there will be conditions attached to you taking out the policy, your insurer should explain these to you before you sign up for the policy.
You also need to know if you will still be covered if you can do other kinds of work than your own. Some policies say you can’t make a claim if you stop being able to do your own job but can do other types of work. You should check the insurance policy to see if it says this.
With most policies you usually have to wait a minimum of four weeks after you stop work for payments to start. This is called the waiting period. Some waiting periods last up to two years. The amount of money you pay for the insurance policy (called the premiums) may be cheaper if you can wait longer before you make a claim.
You will need to know exactly how much you’ll get if you make a claim. The amount of your payments may be affected if you have other income such as state benefits or payments from other insurance policies.
You should also find out whether the payments will go up each year in line with the cost of living.
When they’re working out whether to cover you and how much to charge you for your policy, insurers will assess how dangerous your job is. Different insurers may assess the same job differently, so it’s important to know which category your job falls into as you could get a cheaper premium elsewhere.
What you need to know before you take out income protection insurance
You should always check the terms and conditions of any insurance policy very carefully before you sign up to make sure it meets all your needs.
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