Income Protection

15.07.2020
Richard Ince
Financial Planning

When considering the range of protection policies available, the most common policy is ‘life insurance’.

This type of policy is typically designed to cover a liability (mortgage/loan) on death of the life assured. Now, whilst life insurance is very important it should not be the only consideration. For example, what would you do if you were unable to work due to a long-term illness or injury? How would you provide for your loved ones? Pay the bills? Cover the rent, mortgage – and everything in-between? People often protect their homes, gadgets, cars, and pets, but do not insure the very thing that pays for it all – their income.

What would you do if you were unable to work due to a long-term illness or injury? How would you provide for your loved ones? Pay the bills? Cover the rent, mortgage – and everything in-between?

This is where income protection can help. Income protection insurance is designed to cover your salary if you cannot work, due to an illness or injury, such as a back injury, stress or chronic conditions, such as multiple sclerosis. Unlike life insurance, which pays out an agreed lump-sum to your dependants on death, or critical illness, which pays out a lump-sum if you receive a diagnosis that appears on the insurance providers pre-defined list of illnesses.

Income protection will provide a monthly income (usually around 60 percent of your salary) until you are healthy enough to return to work. Some insurance providers go further than this, and offer a range of services to support your mental and physical health - usually at no extra cost.

Rehabilitation support services gives you access to early intervention treatments and a team of healthcare professionals, who are available to provide specialist advice and support to help with returning to work.

Around one million people a year find themselves unable to work due to injury or illness, according to the ‘Association of British Insurers’. This is not just about being off work, it is the length of absence that really can impact your finances. On average, a UK employee has enough savings to last just 32 days if their income stopped. How would you cope financially?

Income protection is often seen as a complex policy, as there are a wide variety of options to consider. This is where it is important to obtain advice from an independent financial adviser to find the best possible solution for you.

To speak to one of our advisers

Wide-ranging tax planning and compliance services for individuals seeking advice and guidance from our team of experienced and highly qualified professionals.

Friendly and coherent advice and guidance on accounting and tax matters for small business owners including those starting out for the first time.

Established businesses requiring accounting and tax compliance services, forward thinking tax planning advice and the support to help your business succeed.

Our full range of enhanced corporate services aimed at large companies and those requiring audit, assurance, corporate tax advisory and diverse tax planning services.

Glossary

Test

This is a test definition

more