Income Protection : What This Covers

Income protection is an additional feature to life insurance provided by some insurance companies. A life insurance policy can be purchased with additional features which pay out whilst still alive.

Income protection insurance specifically insures against the financial implications for the policy holder if they are unable to work in their chosen profession due to long term sickness, injury or disability.

A monthly tax free income is paid until retirement to support the fixed cost of present day life such as mortgage, debt payments and general day to day living expenses. The amount of cover can be decide at the start of the policy and further enhanced by being index linked throughout the policy for a small extra cost. You are protected in the employment from which you presently provide for your family.

The benefit paid out from the policy can be guaranteed if the policy holder is unable to work due to ill health, until they are able to return back to work in their own role, unlike traditional insurance providers where customers may be forced into an unsuitable job or their provider would not pay a benefit.

All of this in a common sense customer focused product, even an additional recovery benefit of up to £2000 is provided by some insurers which can be used to pay for medical costs and if necessary counselling to help get back into employment.

Income Protection : Who Needs This The Most

Most UK residents believe that they are entitled to some form of income protection through their employer, however this is not always the case and often you will not receive enough through state benefits to maintain the current lifestyle.

Recent statistics show that three out of five people could not survive financially if they were to lose their job, state benefit only pays out between £50.95 and £95.15 per week depending on your personal circumstances; with 98% of people admitting they could not survive on government support alone.

The facts
  • More than half the people claiming state benefits have been doing so for more than 5 years
  • Recent statistics show that you are 26 times more likely to be incapacitated and off work than you are to dies before you reach 65.
  • Almost 25% of people aged 35 will suffer a disability casing them to be off work for 90 days or more

If you believe that through adversity you could not be able to provide for your dependents and continue you present income status then an income protection policy is well worth considering. It has a huge value as it is guaranteed as income through to retirement. On this basis the options available are not prioritised on cost but on trusting the competency and transparency of the provider and their policy terms.