Income Protection

How Income Protection Insurance Works

Our Living Costs Protection, a type of income protection insurance, serves to replace a portion of your earnings if you're unable to work due to illness or injury. This coverage aids in covering essential expenses like mortgage, rent, utilities, and groceries, allowing you to concentrate on recovery.

Payment Structure:Payments are disbursed monthly as a fixed amount, commencing after a deferred period, which ranges from 4 to 26 weeks based on your chosen option. You can make multiple claims during the policy term, but you must return to work for at least 16 hours per week for six consecutive months before filing another claim.

Monthly Benefit Amount:Eligible recipients receive between £500 and £1,500 per month tax-free for up to 12 months per successful claim. It's essential to consider inflation when determining the monthly benefit to ensure financial stability against future price increases.

Policy Duration:Choose a policy lasting from 5 to 52 years or until age 71, with fixed monthly premiums throughout the policy term.

Deferred Period Explanation:The deferred period is the waiting period between the onset of inability to work and eligibility for income protection payments. You can select a deferred period of 4, 8, 13, or 26 consecutive weeks at policy purchase. Longer deferred periods typically result in lower premiums but entail a longer wait until the first payment.

Assessing the Need for Income Protection Insurance:Consider income protection insurance if loss of earnings due to illness or injury would challenge your ability to meet financial obligations. Evaluate your ability to cover monthly expenses with statutory sick pay, personal savings, or state benefits in case of illness or injury preventing work. If not, income protection insurance provides essential financial security.