What is Income Protection Insurance?
An income protection policy will provide you with a monthly, tax-free income if you're unable to work on medical grounds through an event such as an accident, bodily injury or illness. It offers a crucial safety net if you have insufficient savings or employer sick pay to enable you to manage financially in the absence of your monthly pay.
Why do I need to protect my income?
A report by Legal & General * revealed that the average UK employee would run out of money after just 19 days if they lost their income. Despite this, few of us stop to consider how we might cope without our monthly salary.
Income protection insurance is something that every working person should consider – regardless of age or current state of health. Life is unpredictable, and none of us knows what tomorrow holds.
* Source: Legal and General Deadline to Breadline Report 2022
1 Standard income protection insurance
This insurance protects against loss of earnings. It provides a monthly, tax-free income if you’re unable to work due to illness, accident or injury. It covers almost every type of illness or injury and, unlike critical illness insurance, is not restricted to a predetermined list of conditions.
2 Income protection insurance for NHS professionals
Ill health or accidents can happen to anyone and medical professionals are no exception. In the first five years of working for the NHS, employees’ sick pay entitlement is subject to several changes. For this reason, it can be difficult for medical professionals to know what deferral period to choose for an income protection policy. However, policies designed specifically for NHS professionals – featuring an NHS Sick Pay Guarantee – take this uncertainty out of the equation.
3 Group income protection insurance
This insurance is a benefit that employers provide if employees are unable to work for an extended period due to illness/injury. The insurance normally pays a percentage of the employee’s salary (typically 50-75%), with payments beginning after six months when statutory sick pay ends.
3 Executive income protection insurance
An Executive Income Protection (EIP) is an important, tax-efficient employee-benefit for business owners and for their employees considered to be essential to the success of their business. EIP is particularly relevant and important for directors and key employees who have little or no sick-pay entitlement, should they become too ill or injured to work. Furthermore, EIP’s are often arranged for businesses that want to provide an individual employee with income protection as an Employee Benefit.
If you'd like impartial advice about income protection insurance and how it can benefit you, get in touch today.