Income Protection Insurance

Income protection insurance, also called permanent health insurance, provides a regular income if you're unable to work due to illness or disability. Payments continue until you return to work or retire.

How Much Can You Claim?

The income you receive will not fully replace your previous earnings. Typically, you'll get about 50% to 66% of your pre-tax income from your regular job. This reduction accounts for:

• Adjustments for state benefits you may be eligible to claim.
• The fact that payments from the policy are tax-free.

When Do Payments Start?

You won't receive income protection payments immediately after falling ill or becoming disabled.

• Payments usually begin at least four weeks after you stop working, but the waiting period could extend up to two years.
• This delay is because you may initially receive sick pay from your employer or statutory sick pay, which lasts up to 28 weeks.

Income protection insurance is designed to provide financial stability during long-term absences from work due to health issues.

How to work out the level of cover you need for income protection insurance

To calculate the level of income protection cover you need:

1. Start with your current take-home pay.
2. Deduct the amount you would receive from state benefits.
3. Subtract work-related expenses such as travel, food, and clothing, which you won't incur if you're unable to work.
4. Add any additional expenses you might face due to illness or disability, such as higher heating costs or medical equipment.

This will help you estimate the amount of coverage necessary to maintain financial stability during periods when you're unable to work.

How to buy income protection insurance

You can purchase income protection insurance through our independent financial adviser, who can assess various policies available and help you select the one that best fits your needs.