Written by: Andy Walton - Proposition Director - Protection

Unexpected events can have a huge impact on our lives and financial stability. If something happened, and you couldn't work, could you still afford to live?

That's where income protection insurance comes in. It serves as a financial safety net, giving you peace of mind and financial security if something happens that affects your ability to work and earn a living.

Understanding income protection insurance

Income protection insurance is a type of policy designed to keep you protected against the risk of losing your income due to illness, injury, or disability. Conditions that would trigger your insurance will be outlined in your policy, and you will have a detailed overview of your exact coverage. 

It offers a regular income if you are unable to work and earn money because of one of those conditions, ensuring you can meet your financial obligations and maintain your standard of living.

Do you need it?

Income protection insurance is especially important if you don't have substantial savings or other financial resources to fall back on if you get sick. Income protection insurance offers a valuable layer of financial security, helping you to maintain your standard of living and meet your financial commitments when circumstances prevent you from working.

Woman looking at laptop and notebook while holding a pen to her mouth

How does it work?

When you take out an income protection insurance policy, you pay regular premiums to your provider in exchange for coverage. If you become unable to work due to sickness, accident, or disability, the protection policy comes into effect. Depending on the terms and conditions of the policy, you will receive a predetermined percentage of your income as a regular tax-free payment. This ensures that you can cover essential expenses such as mortgage or rent payments, bills, and other financial commitments while you recover.

There is usually a predetermined period of time, known as the ‘deferment period,’ before the protection provider starts paying after you become unable to work. You do have some say in deciding the waiting period when you take out the policy. However, it’s important to note that the shorter the waiting period, the more expensive your premiums could be.

How much does it cost?

The cost of the income protection policy you take out depends on which product you choose and your personal situation. The cost of your premiums that you pay for a protection policy each month is dependent on a variety of factors, including:

  • Age

  • Job

  • Smoker status

  • Waiting period before payments begin

  • Health status

  • Percentage of income coverage

  • Range of coverage (different injuries, conditions, and illnesses)

How do I get income protection insurance?

Life can throw curveballs at us when we least expect it, so it’s really important to have a plan in place in case things go wrong.

If you’d like to take out an income protection policy or switch to a different one, speak to a professional about it in more detail to decide what is going to best suit your individual needs and circumstances.

Get in touch with us today, and our protection advisers can assess your state of affairs and decide which policy works best for your circumstances.

Important information

For insurance business we offer products from a choice of insurers.

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