Income Protection


Insurance Life Insurance

money-savingIncome Protection: What is it?

Income Protection protects individuals from a loss in income caused by extended periods of disability, sickness or unemployment.

Some often think that state benefits will assist them in their time of need; however this benefit only provides the most basic level of support. To main your standard of living, income protection is essential should your income suddenly stop.

According to the Department of Work and Pensions, over 2.2 million people who are of a working age will be off work for at least 6 months due to sickness or disability.

Whilst many employers now provide extra employee benefits, many of these don’t cover past 4 weeks and not all outcomes will be considered i.e. redundancy. Hence, it is advisable to protect yourself further by getting income protection, even if you only top up on the state benefits on offer.

Within Income Protection there are two main types of insurance policies namely, Long Term Income Protection and Short Term Income Protection.

Long Term Income Protection

Long Term Income Protection is often referred to as Permanent Health Insurance as it provides a guaranteed level of income up to even retirement age should the policy holder suffer an accident, sickness or disability which stops them from earning their income.

Typically the maximum level of benefit is 65% of the annual salary not including any other benefits offered by the state or employer. This type of policy can never be cancelled by the insurer and will continue to pay on multiple instances so long as all reasons are legitimate.

Depending on the amount of money you pay into the premiums, Long Term Income Protection can be linked to an index so that it keeps pace with the rising costs of goods and services/inflation.

Short Term Income Protection

Opposite to the Long Term Income Protection, we have the Short Term Income Protection which is often referred to as Accident and Sickness Insurance or ASU (Accident, Sickness & Unemployment). In the event of an accident or sickness this type of policy will provide income between 12 to 24 months. In many cases, some policies offer deferred periods to keep premiums low, which means no cover, is provided for the first 30 to 60 days.

 

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