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Income Protection Insurance

If there's one thing you can guarantee in life - other than death and taxes - it's that accidents always happen. People get ill, too, of course - almost a million a year find themselves unable to work due to health conditions and injuries. And, when it happens, it is often out of the blue. You can't plan for illness or accidents - but you can give yourself a little protection; in the form of income protection insurance.

What is income protection insurance?
Income protection is a form of insurance that helps you if you can't work due to illness or injury. It doesn't cover all your wages - but it does contribute a percentage of your earnings, depending on how much you pay for your policy.

Your insurance will pay out until you can start working again, retire, die, or until the end of the policy period - whichever occurs first. It doesn't pay out immediately, and only kicks in once your sick pay and other insurance policies finish.

Income protection covers most situations with regards to your health, either long or short term. And, you can claim it as many times as you need to, as long as the insurance plan is still in place. It's also worth pointing out that there are no lump sum payments with income protection.

How much is income protection insurance?
As with anything else in life, the type of policy you choose will have an impact on how much you receive in payments. Policies have varying prices, and several different factors determine how much you pay each month.

These factors include your age, current health condition, and your job. The percentage of wages you want to cover are also under consideration when it comes to pricing your plan. You will pay more if you are a smoker or an ex-smoker.

Is it necessary?
Given the sheer volume of people that are unable to work in any given year due to illness, it makes sense to give yourself income protection cover. While the payments won't start until you have used up all your sick pay, it may well give you a chance to keep stable if an illness or injury develops.

It's especially important for anyone who is self-employed, or doesn't receive any sick pay. Without income protection in place, you will have no fall-back to count on if you have to stay off work - and this can cause serious financial pain.

Income protection insurance is not essential for everyone, of course. You might be able to get by on sick pay and government benefits alone - assuming you qualify. Or, you might have built up enough savings or have support from a wealthy relative to survive extended periods of time out of work comfortably.

For most people, though, ensuring you have an income when you are unable to work is essential. Never forget that almost half of all households are one financial emergency away from ruin. So, it makes sense to give yourself as much cover as you possibly can.