Income Protection Articles & Guides

Income protection insurance can provide an income if you’re unable to work through sickness or injury - covering your essential outgoings.

Read more about how income protection insurance works here.

You’re more likely to be off work sick or with an injury than you are to pass away before retirement. Whilst you may receive sick pay from your employer, not everybody does and some people overestimate how much they get. Income protection can provide that financial safety net.

Income protection policies can be divided into two general types: short-term and long-term. A short-term policy, as its name implies, only gives you an income for a present limited time, such as six or 12 months. Long-term policies pay you for as long as the policy allows, which might be right through to your retirement or a longer set period, such as 40 years.

Of course. income protection insurance is available to self-employed, primary carers, part-time workers, contractors and more; our expert advisers can provide you with a tailored quote.

Even if you have some difficulty proving your income, there are plenty of options available.

Read more about income protection for self employed contractors.

Like most insurance products, the cost of income protection differs from person to person. Monthly premiums will be calculated based on a number of factors including: your age, whether you smoke or have previously smoked, your lifestyle (such as whether you have any high-risk hobbies like extreme sports), your job and your health. It will also depend on how much cover you choose to take out, and the deferral period you decide on.

Income protection covers you for most illnesses that leave you unable to work: stress-related illnesses, back conditions, cancer or a serious heart condition. The focus is on not being able to work, as opposed to the illness or injury you’ve sustained.

You won’t be covered for pre-existing and chronic conditions that you knew about before taking out your policy, alcohol or drug misuse, criminal acts, cosmetic surgery or redundancy.

It is essential that you are completely transparent on your application. Our advisers are here to work with you, to find a policy that best-fit's your personal circumstances, and you run the risk of a policy not paying out if you are untruthful.

How much sick pay you get, and for how long you are entitled to this from your employer will help guide how long you could sustain your lifestyle before you need your policy to kick in. Some employers may also provide income protection through work so this too should be looked into.

Income protection will cover a portion of your monthly income should you become too ill or injured to work and have been signed off work by your GP. The cost of monthly premiums will be affected by your age, occupation, smoker status, health and lifestyle and, most importantly, the percentage of income you wish to cover.

You will also need to think about your deferral period, which is the time between you making a claim and when you start to receive benefits.

Knowing details of your income will guide how much cover you are able to take out, and understanding if your employer will provide you with any sick pay will help to determine your deferral period.

When you take out an income protection policy, you will base the payout amount on your current earnings and outgoings at the time.

However, money loses its value over time. Inflation means that a loaf of bread will cost more in the future than it does today. An indexation option on your policy means your cover keeps track of inflation, and doesn’t lose its buying power.

Index-linking your policy increases the amount of cover you’re buying in line with inflation each year. This allows your cover to keep up with the cost of living when it’s needed to pay out.

The amount you pay for index-linked cover goes up with inflation too. Usually the price is adjusted annually.

Alongside your health and lifestyle, insurers will also take a close look at your occupation when deciding the cover they are willing to offer, and at what price. They will put occupations into groups of categories based on how risky they are. The more risk the higher the premiums.

Insurers can, however, have varied views on the risks presented by occupations. If you've been rejected cover by one insurer based purely on your occupation, it's still possible that others might be willing to offer cover. Speak to one of our advisers who will be able to search the market and provide you with a clear picture of your options.

When setting up your income protection policy you will be asked to choose a deferral period. This is the time period between making a claim and when the payouts start. You set what this period will be - the longer the deferral period, the cheaper your premiums are likely to be.

This can often be set to match when your employer will stop providing sick pay. So if you get 1 months sick pay from you employer, you might set the deferral period to 4 weeks to pay out at this point to provide an income.

If cost is a concern, and you have some savings that you would be willing and able to use, which might enable you to last another 2 months without an income, then you could set your deferral period to 12 weeks for example.