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Income protection insurance is a long-term insurance policy designed to support you if you can’t work because you’re ill or disabled. It replaces part of your income if you are unable to work and continues to pay out until you can start working again or until you retire or at the end of the policy. It isn’t the same as critical illness insurance which pays out a one-off lump sum. Instead, income protection pays a percentage of your gross salary or take home pay.
It’s not the same as short-term income protection either, which also pays out a monthly sum related to your income but only for a limited period of time (usually between two and five years) and generally covers fewer illnesses or situations.
Income protection covers most illnesses that leave you unable to work – but whether that means unable to work at your current job or unable to work at all (perhaps due to a serious heart condition) depends on the type of policy you choose and the definition of incapacity in your policy.
It doesn’t matter whether you have dependants or not, if illness means that you couldn’t pay your bills then you should consider income protection. You’re most likely to need it if you’re self-employed or employed and you don’t have sick pay to fall back on.
If you have existing health problems or a dangerous job you may not be eligible for cover.
Pre-existing medical conditions or any illness that you knew about when you bought the policy.
Disabilities or illnesses due to criminal acts.
Misuse of alcohol or drugs.
Disabilities or illnesses resulting from war, riots, invasion or terrorism.
However, if you proceed with income protection, you need to be sure that you can maintain the premiums which can be expensive. It could be that another form of cover is more appropriate for your needs.
If you require more information regarding your protection needs speak to an independent financial adviser.
Love Mortgages is a trading style of pi financial ltd which is authorised by the Financial Conduct Authority. For more information contact: 077 804 42613.