Income Protection is there to support you and your family if you become too ill to work or have an injury that leaves you unable to do your job. Loss of earnings can monumentally impact you and your families ability to cover your mortgage and household bills, even if your employer pays you full or half pay for a period of time, what would happen after that? How would you survive financially?
How does Income Protection work?
If your employed, your employer may offer a certain number of months sick pay, it may be a period of time on full pay followed by a period of time on half pay. Some will only offer a set number of months on full pay, some employers do not pay sick pay at all. After this period has run out or if you have no sick pay at all, you would then be able to use Statutory Sick Pay (SSP). Click here to calculate your entitlement, (https://www.gov.uk/statutory-sick-pay) would this be enough?
An Income Protection policy can be set up to start paying out after a deferred period, this can be set to match the amount of time that you receive sick pay from your employer. For example, if you receive 3 months full pay from your employer, Income Protection can be set to pay out after three months, the longer the deferred period the lower the monthly premium is.
Low Cost Options
The policy pays out a monthly income which is set during the application process. You can choose whether you want your policy to have a low cost option which will pay out for a maximum of 12 or 24 months.
Full Term Option
A full term option policy is a policy that pays out until a set age, e.g. retirement, none of us know how long an illness could last, this type of policy gives you the peace of mind that your payments will not stop after 12 or 24 months, they will continue until either you return to work, retire, the policy ends or upon death.
As the cost of living rises each year, the value of the policies monthly benefit is effectively reduced, £1,000 per month in 10 years time will not go as far as £1,000 per month will now, however the policy premiums can be set to increase each year in line with the Retail Price Index or a level chosen by you, e.g. 3% or 5%.
Income Protection can be tailored to suit your needs, we can help you to understand these
Please note: You must keep up your premium payments on a policy to avoid the policy being cancelled.