Income protection replaces part of your earnings if illness or injury stops you from working. It continues until you return, until the policy term ends, or until retirement, depending on how it is set up.
It is the least bought and most useful policy in the protection range. Most households can absorb a month without income. Very few can absorb a year.
Cover is usually set at somewhere between fifty and seventy percent of gross earnings, and the benefit is normally paid free of tax. The figure is capped deliberately, so that returning to work always leaves you better off.
This is the wait between stopping work and the first payment, commonly four, thirteen or twenty-six weeks. A longer wait lowers the premium substantially.
Set it to start when your employer’s sick pay ends and you pay for cover you actually need. Income protection advice is largely a matter of getting this one setting right.
Short-term policies pay for a set period, often one or two years per claim, and cost less. Full-term policies pay until you recover or reach the end of the term, which may be retirement. The difference matters most for a condition that never resolves.
Own occupation cover pays if you cannot do your own job. Other definitions require that you cannot do any job you are suited to, or measure your ability to perform everyday tasks. Own occupation is the clearest and the one we will usually recommend.
There is no employer sick pay behind you, and statutory sick pay does not apply. For sole traders, contractors and directors, this is frequently the most valuable policy in the plan and the one most commonly missing. Cover can be arranged to begin after a short wait to reflect that.
A review takes one conversation and is free of charge.
