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What does income protection cover you for?

What does income protection cover you for?

9 Feb 2020

You might be asking yourself whether you really need income protection. If you’re employed and particularly if you have no one else’s income to rely on, then the answer is yes - you should be seriously thinking about this insurance product!

Before you go ahead and take out a policy, you’ll want to get totally up to speed with what income protection is and what it covers you for. Here’s a rundown of all the basics…

What is income protection?

Despite being a pretty important one, not everyone is particularly well-versed with what income protection actually is. In short, income protection supports you financially if you’re unable to go to work due to injury or illness. It replaces your income for this time period, which is typically between 50% and 70% of your regular salary. 

Income protection kicks in once you’ve been out of work for a certain predetermined period of time, called the deferral period. This is sometimes six months, but it can be as little as four weeks. It depends what you agree to when taking out your policy and the longer the ‘deferral’ period, the lower your premiums. Once up and running, your income protection policy will continue to support you until you either go back to work, reach retirement or pass away during the claim period - whichever comes sooner.

What does income protection cover you for?

It’s quite simple - income protection covers you for most illnesses that leave you unable to work; for example stress-related illnesses, back conditions, cancer or a serious heart condition. The focus with this product is on not being able to work, as opposed to the illness or injury you’ve sustained which is the main difference between income protection and critical illness cover. 

It’s important to note as well what isn’t covered by income protection. As mentioned, you’re not covered within your chosen deferred period, be that four weeks or four months. You must also be a permanent UK resident, up to date with paying your premiums and most providers will expect you to have been registered with a GP for at least two years. 

You won’t be covered for pre-existing and chronic conditions that you knew about before taking out the policy and pregnancy is also excluded, however pregnancy related complications might be covered. Think of it this way - if anything is self-inflicted then you probably can’t claim for it. This includes alcohol or drug misuse, criminal acts, cosmetic surgery or war-related issues.

Does income protection cover redundancy?

If you get made redundant, get fired or are partly responsible for losing your job, then your income protection policy won’t pay out. Remember, income protection only pays out in the event of injury or illness. Losing your income for any other reason won’t be covered.

Let’s say for example you have made a claim on your income protection policy because you’re out of work due to injury or illness. During this time, you get made redundant. In these cases, your policy may continue to pay out, but this will differ between policies so make sure that you check your fine print. If you’re really worried about being made redundant, you can get specific redundancy or unemployment insurance to put your mind at ease.

If you want to explore taking out an income protection policy of your own, start with us here at LifeSearch. We’ll do the hard work for you and make it simple and straightforward. Give us a call on 0800 316 7253 and one of our friendly team members will be on hand with some award-winning free advice!

Let us get to know you and do the hard work for you

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