When would Income Protection Insurance Help?

Income Protection Insurance is a long-term insurance policy designed to provide you with some income in the event that you are unable to work due to illness or accident.

Should you be unable to work for a period, bills, mortgage re-payments and other costs will still be there, but your income might not be. Claiming on an Income Protection Insurance policy can help, by replacing part of your usual income until you are able to work again.

There are a variety of options available with most Income Protection Insurance policies, and you should consider how to balance what you would like from the policy with how these options increase the monthly premium you will pay.

How does Income Protection Insurance work?

If you can’t work because of illness or an accident, your insurance policy will pay out a percentage of your usual salary. For most policies, these regular payments will be set at around 50-75% of your working income.

Waiting Period: Policies won’t start paying out immediately, payments are deferred for a waiting period. This waiting period will be set out in the policy and you can choose how long to opt for. Choosing a longer waiting period will usually reduce your monthly premiums, making your Income Protection Insurance cheaper. Most policies have a minimum wait of four weeks, but can be set for much longer – several months or even 1 or two years. This might make sense if you feel you could manage without your income initially (perhaps by using savings or managing on a partner’s income) but would like to know there will be support available should the situation not be resolved after a number of months.

Can I get Income Protection Insurance if I am Self-employed?

Yes. Not every Income Protection Insurance provider will cover you are self-employed, so it is important to make your situation clear when you are requesting and comparing quotes, but many will be able to give you cover. The terms of Income Protection Insurance policies for self-employed people may be a little different, and insurers will take into account the fact that many self-employed people have fluctuating incomes. Check the policy carefully, but definitely be confident that you can find this kind of insurance cover when you’re self-employed.

What about Critical Illness Insurance? Is this the same?

No. Income Protection Insurance is quite different to Critical Illness cover. Critical Illness Insurance is designed to provide one lump sum if you are diagnosed with certain serious illnesses. Income Protection Insurance is about providing a series of regular payments to replace part of your income if you lose it due to being unable to work because of accident or illness.

Can I claim on Income Protection Insurance if I am made redundant?

No. Standard Income Protection Policies are designed for situations where illness or accident mean you are unable to work. Standard policies will not cover lost income as a result of your employment being terminated or you being made redundant. If that kind of protection is important to you, shop around as some specialist Income Protection Insurance policies will include options to extend the cover to redundancy and/or unemployment. Stand alone policies can also be found for these scenarios.

What if I die?

We know you don’t like thinking about this, but if you are considering how you would manage without your income, you’re probably also thinking about any other people who rely on that income too. Income Protection Insurance allows you to claim under the agreed conditions, but the policy has no cash value and will not pay out if the policyholder has died. To protect those around you in the event of your death, you need to compare Life Insurance Policies and find that one that will work best for you all in the future.

Finding Insurance

There are so many different types of UK Insurance available, but the basic rules for finding the best Insurance at the best price stay the same, whatever category of insurance you need to shop for. Compare quotes, compare policies and find what works for you. Use the links below to get started.

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