Income Protection Insurance
When life throws unexpected health challenges your way, income protection insurance can provide a financial lifeline. This type of insurance pays you a regular income if you can’t work due to sickness or disability, helping you maintain your standard of living until you return to work or retire.
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What is Income Protection Insurance?​​​
Income protection insurance, also known as permanent health insurance, will provide you with financial backup in the form of a regular income if you’re unable to work due to illness or injury. This essentially guarantees that you can continue to meet your financial commitments, such as mortgage payments, bills, and daily expenses, even when you’re unable to work on your business.
How Does Income Protection Insurance Work?​​​
Income protection insurance typically pays out between half to two-thirds of your pre-tax earnings. The payments are tax-free and continue until you can return to work or reach retirement age. You can expect to start receiving payments after a waiting period, which can range from four weeks to two years, depending on your policy. This waiting period allows you to use any employer sick pay or statutory sick pay before your income protection insurance kicks in.
42%

of UK adults do not have any savings to cover essential outgoings for more than three months.

26%
of the UK workforce has income protection insurance
50-70%
of Income protection policies typically replace a person’s income if they are unable to work due to illness or injury

Is Income Protection Worth It?

Income protection insurance offers several benefits, listed here:
  • Financial Security: Provides a steady income to cover your living expenses if you can’t work due to illness or injury.
  • Flexibility: Tailor your policy to suit your needs, with options to adjust the waiting period and coverage amount.
  • Long-Term Coverage: Unlike other types of illness insurance, income protection can provide benefits until you retire.
  • Peace of Mind: Ensures that you and your family are financially secure, even during extended periods of illness.
According to a survey by Mintel in 2022, only 6% of people in the UK have income protection insurance. If your job offers limited sick pay, income protection can be a vital safety net.

If you are concerned about how you would support yourself if you couldn’t work, then click below.

What Does Income Protection Insurance Cover?

Income protection insurance covers a wide range of illnesses and injuries that prevent you from working. It typically includes:
  • Sickness and Disability: Provides income if you’re unable to work due to illness or injury.
  • Mental Health Issues: Covers conditions like depression and anxiety that can impact your ability to work.
  • Chronic Conditions: Includes ongoing illnesses such as diabetes or arthritis.
It’s important to note that income protection insurance does not cover redundancy. For redundancy coverage, you’ll need a separate policy.

What is Group Income Protection?

Group income protection is a policy provided by employers to their employees. This type of insurance offers the same benefits as individual income protection but is typically part of a company’s employee benefits package. It provides employees with financial security if they are unable to work due to illness or injury.

How much is Income Protection Insurance?

So, how much does income protection cost? Well, as with all other insurances, the cost of income protection insurance varies based on several factors:
  • Age and Health: Younger, healthier individuals generally pay lower premiums.
  • Occupation: Jobs with higher risk levels attract higher premiums.
  • Lifestyle: Smoking, heavy drinking, or participating in high-risk activities can increase your premiums.
  • Waiting Period: Policies with longer waiting periods before payments start tend to be Coverage Amount: Higher coverage amounts lead to higher premiums.
It’s crucial to balance the cost of the policy with the level of cover you need to ensure that your policy can offer you the full extent of the coverage you may need.
Common Questions About Income Protection ​​
If you rely on your income to meet financial commitments and your employer doesn’t provide long-term sick pay, income protection insurance is essential.
Explore different types of illness insurance to find the best fit. Critical illness insurance is often more affordable than income protection but offers limited coverage. If unsure, consult a financial adviser for guidance.
The income you receive from an income protection policy is generally tax-free, but it’s always best to consult with a tax adviser for specific advice related to your situation.
No, income protection insurance does not cover redundancy. You will need a separate policy for redundancy coverage.
Is your current policy fit for purpose?​​
When was the last time you checked your self-employed income protection policy? It’s crucial to keep your details up-to-date, especially if you’ve changed jobs or taken on higher-risk tasks.
Don’t wait until you need to make a claim to find out your information is incorrect. Remember, income protection is just one part of your financial safety net. Life insurance and business protection are equally important.
When you take out a self-employed income protection policy with us, you also get access to our complimentary estate planning service. This allows you to focus on growing your business and supporting your loved ones.
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Contact Information

  • +44 0141 370 6999
  • enquiries@securemp.co.uk
  • Secure Mortgages and Protection Ltd. Suite G.04 The Greenlaw Works Greenlaw Way Newton Mearns Glasgow G77 6EF

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