Income Protection Insurance

For many people, becoming seriously ill has an impact on their lives beyond their health. Income Protection Insurance helps you to maintain a standard of living following an accident or illness which prevents you from earning your income.

Income Protection Insurance is sometimes referred to as Permanent Health Insurance or PHI depending on the insurer or broker you speak to.

We can provide income protection insurance quotes and help you to understand the benefits of income protection insurance.

Imagine not being able to work because of illness or accident. A couple of days off work, even a couple of weeks, might not make too much difference to your finances. But just think if your condition was more serious and you were absent for a prolonged period, money worries could soon add to your troubles.

Do you have any idea of how much income protection insurance cover you need

For a lot of people, employer and State Benefits simply aren’t sufficient to keep them financially afloat when illness or accident strikes. Even more alarming is the thought that the growing financial burden on employers and the State could result in benefits falling in the future, creating an even bigger protection gap. If you are Self-Employed you could only rely on the State and therefore your situation could be far worse. Simply because you’re off work and unable to earn a living won’t mean that your mortgage or rent payments, food bills, utilities, credit card bills and all the other demands on your money will stop coming in. So with no income from work how are you going to pay them?

This is where Income Protection cover comes in and offers an affordable and refreshing way in which to protect lost earnings when illness or accident stops you from earning a living.

Care should be taken to check what the insurance company means by disability. As a general rule it is better to consider a plan that pays the benefit if you are unable to carry out your usual occupation. This type of cover is referred to as 'own occupation'. Some plans will only pay a benefit if you are so sick or disabled that you cannot work at all. You should take into account that it is far less likely you will be unable to do any work than you are unable to continue your usual occupation.

The income from a PHI plan or scheme is tax-free but you do need to be aware that any income you receive may have an impact on any State Incapacity Benefit that you wish to claim. There can also be situations where if you are receiving income from other sources, during the period of your sickness or injury, the benefits under your plan could be scaled back. A good example is where you are forced to retire early from your usual occupation and start receiving an ill health early retirement pension. In such instances the Insurance Company may scale back the benefits under your PHI plan.

The differences between plans are:

The definition of occupation: Some plans will only accept a claim if you are unable to do any work, it is normally more advantageous to consider plans that provide cover against you being unable to carry out your usual occupation.

Term of the cover: whether this is for a fixed term or throughout their working life or usually to age 65, whichever is the sooner.

Waiver of premium: Where the premiums to the policy are suspended throughout the duration of a claim. However, the policy continues to be active and if you return to work the policy, and the protection available from it, is reactivated.

Index-linked benefits: During the term of the policy, the level of cover increases in line with rises in your salary, a chosen index or perhaps rises in general inflation. In these instances the premium levels may also increase by a similar rate.

Fixed premiums: the premium levels are fixed at outset and remain the same throughout the whole of the policy's term.

Deferral periods: these represent the time periods that you must be away from work, due to illness or disability before the benefits under the policy may be claimed. Deferral periods range anything from 1 day to 12 months. Generally the longer the deferral period the lower the premiums to the policy will be.

You should ensure the length of deferral period established within your plan is appropriate to your circumstances. Many employed people can afford to set longer deferral periods, as their employers choose to pay them their normal income during the early months of a long term illness. If you are self-employed you should think carefully about the appropriate period of time of the deferral period.

Request your income protection quote.