Income Protection

Ensuring you continue to meet your mortgage re-payments

If you were unable to work tomorrow how long would you be able to afford your mortgage payments for? What about your normal living costs including food and bills? You shouldn’t assume that sickness benefits will enable you to maintain your current standard of living. Taking away your income will have drastic implications on your lifestyle.

Income protection enables you to cover some or most of your income in the event of you being unable to work. The key points are covered below:

  • What is covered? – most illness or disability severe enough to prevent you from working
  • When is it paid? After a deferred period the regular payments begin – you can choose this
  • How often can you claim? Some insurers restrict the amount of times you can claim whereas others will allow as many claims as you need during the term of the policy
  • How much can you get? Payments are a percentage of your earnings – usually a maximum of 50% to 65%, however this is paid to you tax free

Income Protection is particularly important for the self employed or those who do not qualify for any form of sickness benefit through their employment.

Types of Income Protection

There are 2 main types of income protection to consider:

  1. Short-term Income Protection – Short-term polices help you cover your essential outgoings when you are unable to make payments for a short period of time, typically 1 to 2 years, these policies are normally cheaper than a full income protection policy. A variation of this type of policy is known as an accident, sickness, and unemployment policy (ASU).
  2. Long-term Income Protection – Long-term policies provide regular income if you are unable to work due to illness or disability. The policy would continue to pay you an income until the end of the policy term which is usually set up to match your retirement age. However, unlike some short-term polices, long-term income protection will not provide you with cover if you are made unemployed or redundant.

Income protection (with no investment link) has no cash in value at any time and will cease at the end of the term.  If you stop paying premiums your cover may end.

More Information and Help

To find out more about how income protection could help you to protect your home, give our team a call today on 01179 070 818.