What is Income Protection insurance and do I need it?
Despite our optimism, accidents and illness can happen without warning.
To ensure that you won’t be left struggling to make ends meet during such times, having your income protected is essential for making sure monthly mortgage payments and household bills remain on track even when life takes an unexpected turn.
As of 6th April 2023, Statutory sick pay increased from £99.35 a week to £109.40 per week and is paid for a maximum of 28 weeks. This is paid by your employer and there are certain criteria you need to meet to qualify. However, receiving this money may not be sufficient enough to cover all your bills and mortgage payments, which is where an income protection policy can fill a shortfall.
If you are self-employed, then you may not be entitled to anything, making income protection more vital.
When taking out an income protection policy, there some factors to consider, which is why using one of our advisors could save you time and money and be sure you have the correct policy for you.
Employer Benefits
Depending on your employment type, you might receive sick pay through work. This will need to be considered when recommending your cover as this may void your policy, if you are receiving more income being off work than at work.
Deferred Periods
This is set depending on your personal circumstances. If you are receiving sick pay from work for the first 6 months, then you wont need an income protection policy to start instantly, as this may void your policy.
We have the option to defer your policy and start when you feel necessary, and this can anything from one month to twelve months. The sooner the policy is set to start can make your premiums more expensive.
If you have sufficient emergency funds, then this may tie you over for the first few months of being off work.
Income Amount
This will vary between providers, but most will usually give you anything between 50% to 70% of your income.
Occupation
Another factor to consider is your occupation. Depending on what you do for work, could limit or make changes to the policy we apply for. Providers rate the risk of your job on a scale of classes from one to four. One being lower risk, office-based or limited business miles and four being higher risk, heavy manual work, or bar work.
A full medical application will be required for the underwriters to assess you, and these questions are about your health and lifestyle as well as a few questions about your daily work activities.