Would you be able to cope financially if you were off work for a period of time from illness or accidental injury? In fact do you actually know how long your employers will actually pay you – or worse what if they don’t?
Income protection is an insurance policy that provides you with an income if you are unable to work as a result of accident or illness. Most policies will then pay a regular monthly amount until you have made a full recovery, until retirement age, for a fixed term – or death if earlier.
Don’t confuse it with PPI which is a completely different kind of cover and in no way comparable to Income Protection.
Income protection can be useful as a supplement to state benefits, as these generally prove insufficient to maintain the lifestyle you are able to enjoy on your current earnings.
It is traditionally used to cover your salary and the maximum amount you can insure for will enable you to broadly match the after-tax earnings you would otherwise lose.
Costs vary depending on your circumstances, your medical history, the time for which you defer payments but also on the provider. New products have also come on the market which have “budget cover” where the claim period is reduced in order to make it affordable to everyone.
Income Protection policies vary greatly, from own or suited occupation to RPI or NAE increases so it’s essential you get advice on what policy works for you and also review the plan in line with job changes/salary increases.
Finally, it is also essential that you are open about any previous medical conditions, regardless of whether or not you think they are significant. Non-disclosure remains one of the most common reasons for claims being declined by providers and will probably only arise right at the moment you most need the money.