Income Protection is designed to pay out a regular monthly monetary amount to help cover your expenditure should you be unable to work.
What does Income Protection Cover?
The Insurance will pay out a regular, reduced income in the event you are unable to work due to an accident, illness or in some circumstances made redundant.
Some policies will continue to pay a regular reduced income if you are unable to return to work up until the end date of the policy which is typically your normal retirement age.
What is not covered by an Income Protection Policy?
Depending on the cover, you may be covered for Redundancy however many Income Protection policies are designed to cover illness or injury, Insurers will not cover dismissal.
Salary Protection Insurance
Income Protection Insurance does not cover 100% of your salary, most commonly the cover is 50-65% of your pre-tax earnings and some policies can go a little higher if needed.
Family Income Protection
Is a type of life insurance but the difference between this and a normal life insurance policy it pays out monthly rather than a lump sum.
Important Information to Consider
No policy will ever match your basic income. The most it will cover is up to 65% of your basic income.
The longer the deferred period when making a claim, the cheaper the policy is. Generally people chose a 3 month deferred period whilst most self-employed clients take a 4 week deferred period. Day 1 cover is also available. It all comes down to your budget.
The cheapest policies generally pay a nominal amount for a 12 month period only.
Making a Claim for Redundancy
You cannot be under notice of redundancy when taking out the policy.
Self-employed people cannot claim for redundancy.
As Independent Financial Advisers we can help you find the plan that best meets your requirements.
The plan will have no cash value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.
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