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Income protection will pay you a monthly income, for a set period of time, in the event that you are unable to work due to illness or injury. The policy will pay a percentage of your normal income, so that you can meet your priority financial commitments and living expenses while you recover.
If you’re self-employed or working for a company that doesn’t provide sufficient sickness benefits, then having an income protection policy gives you the reassurance that you’ll be able to cover costs if you have to go off work.
INCOME PROTECTION FAQS
Can I have income protection if I am self-employed?
In short, yes. This is probably one of the most important things when you’re self-employed. If you suffer from an illness or injury, which leaves you unable to work, what would you do? You may be able to apply for Employment and Support Allowance, which is nominal compared to your monthly income. You can expect to receive up to two-thirds of your monthly salary.
How much does income protection pay out?
Most income protection policies will pay out two-thirds of your normal monthly salary, as the policies are intended to act as a stop gap, as opposed to fully replacing your income.
Each policy has what is known as a “deferred period” which is the time between when you first go off work and when the payments start. Deferred periods range from 4 to 26 weeks. When you apply for your policy, you can choose which deferred period is right for you – for example, you might have savings that will last you for a few months, meaning that you don’t need the payments to start until then. The longer your deferred period, the cheaper your premiums will be.
Do I need income protection?
That all depends on your personal situation, but to help you decide, you should ask yourself the following questions:
- Would I still have money coming in, if I couldn’t work?
- Would I be able to pay my bills and priority commitments if I was off sick?
- Could I live on Statutory Sick Pay or Employment and Support Allowance?
- Do I have enough savings to make up any shortfalls?
If the answer to any of the questions above is “No” or “I don’t know,” then you might need income protection. Speak to one of our advisers, and they will talk through your options and help you decide what type of cover is right for you.