Income Protection

What is it?

Income Protection Insurance provides regular tax-free monthly payments if you are unable to work due to an injury or illness. These monthly payments will continue until you return to work, retire, or die - whichever happens sooner.

Why do I need this?

If you become ill and unable to work for a time, you would want to ensure that the essential monthly expenditure for your household can continue, including crucial financial commitments such as mortgage repayments, and essential living expenses.

An employee will be entitled to Statutory Sick Pay for 28 weeks, and an employer may add a further contribution on top of this. However, if you are off work for longer than this, then without the appropriate insurance policy in place providing an income replacement, finances could become severely stretched. Furthermore, the sick pay you receive may not be sufficient to keep up with your household expenditure in the first place.

Self-employed individuals, as they do not have an employer, are not entitled to Statutory Sick Pay. This makes them even more vulnerable with regards to financial support should they be unable to work for a time due to illness or injury.

Therefore, this is a crucial insurance policy for all working individuals.

 FAQs

  • There are two key differences.

    Firstly, CII pays a one-off lump sum, whereas IPI pays out monthly.

    Secondly, CII pays out upon diagnosis of a pre-defined illness, regardless of whether the policyholder can continue working or not. Whereas IPI pays out where the policyholder is unable to work due to illness or injury, and there will be conditions that must be met to fulfil this criteria.

    For example, if you are diagnosed with a type of cancer and can continue to work, you may receive a pay out from a CII policy if your cancer meets the pre-defined definition on your policy. However, as you can continue to work, you would not receive a pay out from an IPI policy.

    However, if you are injured and unable to work for a time, you may receive a payout from an IPI policy as long as you meet its criteria, but you will not receive a CII payout unless your injury matches the definition of a pre-defined illness on your policy.

  • The protection offered through your employment contract is only available to you as long as you remain in this employment. If you were to leave, you are essentially unprotected and you and your family are at risk should anything happen to you.

    Therefore, considering this, and the payout amount needed, having your own life insurance policy is important to consider.

  • Although the risk of becoming ill is less in younger age groups, this risk increases as you get older. Therefore, it is worth considering locking in a good premium rate whilst you are viewed by insurance providers as a low risk prospect.

    However, the risk of an injury can depend not on your age, but your line of work. For example, an individual in a labour intensive role is at more risk of becoming injured than an individual working in an office, regardless of age.

    Therefore, this type of insurance is relevant to all working individuals.

  • That’s where we can help. Send us an email or fill out the enquiry form in the Get in Touch section, and one of our advisers will be in touch.

Income Protection Insurance policies have no cash value and will not pay out at the end of the policy term without making a valid claim. If premiums are not maintained the cover will lapse.