Income Protection Insurance

If something happened to you, would you be able to survive on savings or on sick pay from your employer? If not, it’s important to consider other options available to you to ensure you can keep up with your monthly bills.

Income protection is designed to replace loss of earnings until you are physically able to return to work.

What is Income Protection?

Income Protection insurance can be offered as a long-term or short-term insurance policy, which is designed to help you if you’re unable to work due to illness or injury.

The policy ensures you are able to continue to receive a regular income until you can return to work, until you retire or until you die.

Short-term Income Protection

A monthly payment is made for a fixed period of time if you’re unable to work due to an accident or sickness. This is typically 1-5 years. There can be up to three different types of cover which will be available to you on a short-term basis: accident and sickness only; unemployment only; or combination cover – which combines accident, sickness and unemployment cover.

Long-term Income Protection

Similar to short-term income protection, the long-term policy will cover you if you are unable to work because of illness or accidental injury. The payments will be made to you in a tax-free amount each month, until you are able to return to work or until the policy term expires, whichever is sooner. When signing up to your policy, you are able to select the duration you wish to be paid until, with most opting to be covered until retirement age.

The majority of income protection insurance providers will cover a percentage of your monthly salary, usually between 50-75% of your gross income. Some providers may have options to assist with your mortgage payments and any outstanding debts that are required to be paid throughout the period you are unable to work.

Independent Mortgage and Insurance Advisors, Lincolnshire — An Income Protection insurance policy makes payments if you're unable to work because of injury or illness.

Paul Harrison

The team at ChoiceMortgages UK Ltd were fantastic. They helped me get a great mortgage, handled my life insurance policy and even arranged the buildings/contents insurance for my new home. I would strongly recommend that you contact them if you're looking for a new mortgage. A great team, in particular John and Nicola, that go that extra mile in helping you.

A great team

Why take out Income Protection Insurance?

Knowing you are protected with income protection can give you peace of mind that you and your loved ones will be covered financially in the event you are unable to work due to an accident or sickness.

Income protection will help you in these ways:

You will receive a regular income in the event of accident or sickness
You can maintain your financial obligations, such as paying your mortgage
Increase your financial security
Protect you and your family and give you peace of mind
Take advantage of specialised support services
Focus on getting well without added financial stress

How much will Income Protection cost me?

As with all insurance policies, they are based on your circumstances. The cost of income protection insurance will depend on the policy you opt for, together with your own personal situation.

As well as the policy type you select, others factors which are taken into consideration are often age; job title; smoking history; the percentage of income you’re looking to cover; your current health; family history and then also the waiting period before the policy pay-out starts.

Choice Mortgages UK Ltd - Independent Mortgage and Insurance Broker, Lincolnshire

Our expert team are here to advise and support you through every step.

What happens once an Income Protection claim is made?

It is important that as soon as you find out you will be out of work for a specific period of time, you call your policy provider. They will require information such as your personal details, your policy details and your reason for claiming (i.e. the nature of your illness and how long you are intended to be out of work for).

When you originally took out your policy, you will have selected a wait period before any payments are made to you. Payments will be made in monthly installments after this deferred period. It is always important to keep up with your policy premiums, otherwise if you are required to make a claim and any payments have been missed, this may result in an invalidation in your policy which will also affect your claim.

Important factors to consider

Ensure all your details are accurate

Ensure all details you provide are accurate at the time of applying for your policy. Any incorrect or inaccurate information may result in a rejection of your claim or alternatively a lower income if you’re existing income is lower than the amount you declared on the policy.

Keep the policy up to date

If your circumstances change, such as a change of job roles or unemployment due to being fired or quitting, you must let your policy provider know.

Waiting period

There is often a waiting period once you make a claim and before you receive any monies from your policy provider. Generally, your payments are set to start after your employer’s sick pay ends, however if you’re self-employed or not entitled to sick pay – it is important to consider this when selecting your wait period.

Not the same as Critical Illness cover

Income protection does cover a wide range of illnesses and situations, but it is not the same as critical illness cover.

Cancelling a policy

If you look to cancel your income protection policy, it is important to review your selected policy provider’s terms and conditions. Often, you have a 30-day window which will enable you to receive a full refund should you wish to cancel your policy. Anything outside of this may result in a loss of funds in comparison to what you have already paid.

Keep up with your premiums

Not keeping up with policy premiums may result in a rejected claim or a delay in payment. It is important to keep up with your monthly policy payments.

How ChoiceMortgages UK Ltd can help

With over 70 years of insurance advice, Nicola and Tony will guide you to understand the best insurance options for your situation. We are used to handling the different aspects of these policies and aim to make the process as simple and easy as possible.

We will discuss your requirements and carefully understand details of any existing policies or employer provisions relating to sick pay.
We will explain the difference between full and short term protection, deferred periods and maximum benefits available.
We will talk you through the index linked option, before tailoring our advice and recommendation specific to your age, lifestyle, budget and occupation.
We know the all the providers and can efficiently determine the best policies for you.

Guidance on the right product

It is difficult to imagine ourselves in a situation where we are unable to work due to sickness or accidents, however it is important to consider these things can happen at any time.

At ChoiceMortgages, we understand that income protection insurance can be difficult to get your head around, as well as the thought of a new financial commitment. We promise to take time to understand your requirements so we can tailor a package that meets all of your insurance needs, as well as considering existing policies you may already have in place and any employer provisions.