Income Protection

Off the shelf policies are not always the best. Contact us and we can talk through your options.

What is it?

An Income Protection plan is designed to pay out a regular income in the event you are unable to work due to an accident or illness. These types of plans continue to pay out an income as long as you are unable to return to work up until the end date of the policy (typically your normal retirement age).

This type of plan is quite often seen as the foundation of any financial planning as it is likely that other plans will have to be given up if you do not have sufficient income coming into the household.

How does it work?

  • Deferred period. Initial deferred or waiting period during a claim before the benefit is payable.  The deferred periods can be as short as 7 days and may be ‘back to day one cover’, 4 weeks, 13 weeks, 3 months, 6 months etc… the shorter the deferred period then a higher monthly premium cost.
  • The benefit, premium rates are higher for longer payment terms.
  • Permanent Policy. IPI is also known as permanent health insurance or PHI, as it is a permanent policy rather than a plan that is renewed each year and can be cancelled by the insurer in the light of bad claims experience. The insurer needs to be aware of a customer’s change in occupation.
  • Rehabilitation and proportionate benefits. This is benefit level that is proportionately reduced according to the ratio of current earnings to their insured earnings where returning to an old job at lower earnings level (Rehabilitation) or return to another occupation are paid less working on the same basis (proportionate).
  • Benefit Limits. Important to mention this is usually in the region of 50-60% of last year’s earnings before any claim, after making a deduction for employment and support allowance (ESA). There is a limit on the benefit for an individual as the aim of the policy is to ensure that an insured will not be better off financially by claiming, although does offer valuable assistance prior to returning to work.

Who is it for?

This type of plan is designed for anyone whom is working (employed or self employed). It’s worth pointing out that even if your employer provides sick pay, it is unlikely to last for longer than twelve months and so ongoing protection is essential. Plans can be adapted to fit in with any existing protection you might have. As Independent Financial Advisors we can help you find the plan that best meets your requirements.



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