Income Protection Insurance

Income Protection cover is designed to ensure you will continue to receive an income if you are unable to do your job as a result of illness, injury or disability.   (This can also be referred to as Long Term Income Protection, which, unlike Short Term Income Protection, will not cover you if you are made redundant).  It is particularly valuable for families who rely on the income of one spouse.

Typically, an income protection policy will pay 65% of your monthly salary, tax-free, in order to help you and your family maintain essential payments and lifestyle, during your illness or disability, and whilst recovering.  Payments will continue until you are well enough to return to work, until the end of the policy term, retirement or death.

If you claim on an Income Protection policy, there is a waiting period before it will start to pay out, called a “deferred period”.  This can range from 1 week to 104 weeks – you can choose how long you want this period to be, and choosing a longer period could help to reduce the cost of the premiums.  However, as most employers will pay you a salary or “sick pay” for a certain number of weeks after you are unable to work, the deferred period usually ties in with that.

The sooner an Income Protection policy is in place the better – because illness or injury can strike at any time and taking out insurance after the event won’t cover it.  Most quality insurers have disclosed that approximately 1 in 4 income protection policies are claimed upon, and over 98% of these policies will pay out the monthly benefit for the insured.

There are different Income Protection Insurance policies for different employment sectors, here are a few of them;

  • Pilot’s Income Protection Insurance – this type of insurance is vital for pilots who must maintain peak physical condition, and where even the slightest health issues may ground them and prevent them from working. Most airlines provide a form of income protection for their pilots, but this is mostly limited to a maximum period of 12 months.  Pilot Income Protection Insurance can be used to extend the cover, enabling your family’s lifestyle to be maintained until you are well enough to return to work.
  • Contractor’s Income Protection – because contractors are self-employed, there will be no sick pay when ill or unable to work. This can be avoided by having Income Protection insurance and will mean that your standard of living won’t be compromised during the hard periods of recovery.
  • Dentist’s Income Protection Insurance – certain Income Protection Insurance policies are specifically designed for dentists.
  • Doctors Income Protection Insurance – essentially, Doctors Income Protection Insurance policies are specifically targeted at helping to maintain a doctor’s lifestyle and financial security in the event of injury and illness leading to an inability to work either permanently or temporarily.

For more information, please get in touch.

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