What is income protection insurance?
Dealing with a long-term illness or injury can be both upsetting and costly and an added worry when it prevents you from working, as you may lose your income.
Income protection insurance can pay out a monthly tax-free income to replace your salary whilst you are unable to work as a result of illness or injury.
A variety of income protection policies are available which you can tailor to meet your needs, but what should you look out for?
Income protection insurance features
Key features of an income protection policy include:
1. The level of cover – you can choose from three levels of cover:
- Own occupation cover – if you are unable to work at your own occupation as a result of illness or injury
- Suited occupation cover – you can’t do your own job or a similar one
- Any occupation cover – you’re too ill to do any kind of work
2. The length of payout – this can be a set period of time such as 5 years, or it can align with a life milestone like retirement or when your children finish full time education
3. The amount of the payout – this will either be a set amount, or a percentage of your income
4. The time of the payout – either when you statutory sick pay ends or when your savings run out
Factors that influence the cost of income protection insurance
A number of factors will influence the cost of your income protection insurance premium, including:
- Health (including family medical history)
- Whether you are a smoker
- The amount you want to cover
- How long you want to be covered for
- What your job entails
Other health insurance information: