What is Income Protection?
Income protection is a form of insurance which can provide a regular income if you are unable to work as the result of a long-term illness or injury. Income protection typically enables policy holders to claim between 50-70 per cent of their incomes and these payments are tax-free. Benefits are paid either until you recover, and can return to work, or until the policy term runs out. Income protection can therefore play a vital role in enabling you to continue to support your family even in difficult times. It may be chosen alongside (or as an alternative to) critical illness cover.
Do I need Income Protection?
It makes sense for most people to take out some form of income protection to guard against being unable to work for a lengthy period through injury or illness. We all tend to take our health for granted but our ability to pay the bills can very quickly be jeopardised.
Income protection is essential for breadwinners who have dependants who are reliant on their income. It is especially important for the self-employed, who can otherwise find themselves in greater difficulty than most.
What types of Income Protection exist?
There are two main types of income protection:
- Long-term income protection will pay out until you retire, die, or return to work.
- Short-term income protection is usually cheaper but will expire after a specified period, typically between one and five years.
With both types you can claim more than once within the duration of the policy. So if you make a claim, return to work and you’re then off work with the same condition two years later, there is nothing to stop you from making a second claim.
Income protection policies do not start to pay out until you have been off work for a certain period of time. This is known as the ‘deferred period’ and it can last from between a month to a year. If you want to reduce your premiums you should opt for a longer deferred period.
The other main factor in determining the cost of income protection is your occupation. Your health and your lifestyle will also be taken into account.
To find out more about income protection, why not give Better Protect a call on 0203 540 1667 or request a quote using our online form. We offer friendly, expert assistance over the phone and a member of our fully trained team will call you back to discuss your needs more fully. We’ll find the most suitable policy for you and get you the best-possible discounted deal.