Protection: Income Protection Insurance

Income protection pays out if you're unable to work due to sickness or accident. Formerly known as permanent health insurance, long-term income protection pays out until retirement, death or your return to work, while short-term income protection pays out for a set period, usually between one and five years.

Income protection doesn't usually pay out if you're made redundant, but will often provide 'back to work' help if you're off sick.

Payouts are usually based on a percentage of your earnings: 50% to 70% is the norm, and payments are tax free. Income protection policies only pay out once a pre-agreed period has passed, generally ranging from one to 12 months after you put in a claim.

The longer the 'deferral' period you choose, the lower your premiums. For example, if your employer pays your salary for six months, then you'll need cover to start from the seventh month of sickness, ie a six-month deferral period,

Speak to our expert protection advisers today on 01244 904 410

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