What is income protection?
Income protection in essence is an insurance policy that provides sick-pay, up to 70% of your normal income, in the event that you are unable to work to an accident or illness. However, unlike most people’s sick pay, there is the freedom to design the cover to exactly match your requirements and the pay-out term can run up until your planned retirement age. We have long believed that it is the single most important insurance policy that you can take, as if you are incapacitated and unable to work for a prolonged period you are likely to lose the ability to pay many of your normal monthly bills, viewpoint up by consumer group Which? Money in 2012 when they stated: Income Protection is the one protection policy every working adult should consider. Strange to think then that in 2013, only seven per cent of working adults have income protection, in fact, more people in the UK have pet insurance than have income protection!
What it is not
It is extremely important that income protection is not confused with the dreaded PPI/MPPI. These types of policy offer vastly inferior protection to income protection and we would in no way recommend or approve these short term insurances. The table below shows a more detailed comparison of income protection verses PPI and related products.
|Income protection||PPI / MPPI etc.|
|Most occupations can be covered on an own occupation basis , offering the best protection||Definition of incapacity||These policies typically use The suited occupation definition and are therefore harder to claim on|
|Policies are available that will pay out until the end of the policy term, covering all claim durations||Length of pay-out||Typically have a maximum claim period of up to 12 months when the average income protection claim is seven years|
|For the vast majority of occupations it is possible to take a policy with fixed premiums For the full term||Fixed premiums||The premiums are reviewable and can therefore be increased at any point by the insurance company|
|All policies are medically underwritten before they start so you know exactly what you will and won't be covered for||Medical background||It is normal for these policies to exclude any pre-existing medical conditions, though this may only be obvious in the event of a claim|
|Policies are available that have no standard exclusions in the small print , therefore offering the best possible cover||Standard exclusions||Standard exclusions are often applied to certain common claims , such as back conditions and stress related illness|
How to use this website
The comprehensive information contained in this site should allow you again good understanding of what an income protection policy can and cannot do, pointing out important factors to be aware of and enabling you to narrow down your choices and ask the right questions if you are considering taking out a policy. We would not however, suggest that you ever take out an income protection policy before speaking to an adviser that specializes in this field as the chances of making an incorrect a choice of options is far too high. This is illustrated by the fact that there are a number of highly ethical income protection providers that only allow their policies to be taken through an adviser, to avoid mistakes and typically these providers rank very highly when considering the percentage of claims paid. SO IF YOU ARE CONSIDERING TAKING OUT AN INCOME PROTECTION POLICY, SPEAK TO AN ADVISER.
Our recommendation is for you to input your details once you feel you have an understanding of what income protection is and the choices available to you and we will then put you in contact with an advisor that has been carefully vetted to ensure that they can genuinely be called experts in the field of income protection, so that you can discuss your requirements in detail and fine-tune your choices. In our experience there is a rather small percentage of financial advisers that fall into this category so any adviser that we put you in contact with will be one of the elite protection advisers in the UK and the good news is that they will also be able to offer expert advice on life insurance or critical illness cover should you need it.