Protecting you and your family...
What is Income Protection?
Income protection, formally known as permanent health insurance, is a policy that pays out if you’re unable to work because of injury or illness.
It differs to critical illness in that it doesn’t pay out one lump sum, its designed to pay you a monthly amount, as a percentage of your income to help with monthly outgoings.
It’s worth understanding that its intended to protect you for a pre – designated period. This could be a short period of 6 months for example, or instead the pay-out could be for many years. Ongoing illnesses or medical conditions would be covered by a critical illness policy.
Income protection will not cover you for redundancy or dismissal from your employment.
Just like Life Insurance or Critical Illness Insurance, Income Protection Insurance takes into account your medical history. However, it also looks closely at what profession you are involved with; the more dangerous your job, the more expensive your cover will be as a result of the risk of you being off work.
What are the types of Income Protection available?
Income protection differed significantly between providers, with many different products, often with confusing names. As mentioned already, it can be referred to as ‘permanent health insurance. In some instances, its also referred to as ‘Long-Term Disability Insurance.’ Many insurers also abbreviate Income Protection Insurance as IP!
Broadly speaking, Income Protection Insurance can be had in the following forms:
Do I need Income Protection?
How much does Income Protection cost?
This very much depends upon your individual circumstances, your health, the type of job you do, the amount you would like to receive each month.
Depending on how much you earn, it’s possible, to pay as little as around £15 a month up to several hundred pounds – depending upon your needs.
You can also ‘index link’ your income protection to take into account future rises in the cost of living, however, this will also make your premiums more expensive.
How much cover can I get?
This will largely depend on the amount you are prepared to pay, for employed people the maximum is often 65% of your monthly income (in some instances 70%). For self-employed people, monthly pay-outs are often calibrated at between 50 to 70% of your pre-tax profit.
The amount you receive will affect your state benefits (the amount of universal credit you are entitled to), however, the monthly sums are tax free.
Does Income Protection always pay out?
In genuine cases, income protection does pay out. The instances that it doesn’t pay out could be down to:
Do I need to put my Income Protection Insurance in a trust?
The simple answer is no, since such a policy has no bearing on life cover benefits and Inheritance Tax (IHT).
Where should I get my Income Protection insurance from?
As with all forms of insurance, there are many providers and types of policy – so much so, that it can be difficult to know quite where to start.
Its always best to get some free impartial advice from a specialist like Dunham McCarthy Mortgages since they already have a considerable market and product knowledge and will know exactly what’s best for your individual circumstances.
Answer a few simple questions
The first step is to find out a little more about your situation before scheduling a consultation with the most suitable specialist. Appointments are usually available within a few hours or can be scheduled in the future.
Speak with one of our expert advisors
It’s good to talk, and our friendly mortgage team are here to answer your questions. We do not charge for advice so what are you waiting for, book your appointment today.
Let us find you the best deal
Once we understand your goals the final step is for your advisor to research the market and find you the most suitable product.