Income Protection

• Coverage Scope: Income Protection typically covers a wide range of illnesses and injuries that leave you unable to work. Unlike critical illness cover, which specifies the illnesses covered, Income Protection can cover any medical condition that prevents you from doing your job.


• Deferred Period: You can choose a deferred period for your policy, which is the time between making a claim and when the payments start. This can be adjusted to align with any sick pay you might receive from your employer.


• Benefit Period: The policy will continue to pay out until you can return to work, retire, the policy term ends, or in the event of your death.


• Percentage of Income Covered: Most policies will cover up to a certain percentage of your pre-tax income (usually around 50-70%).

• Initial Application: When you apply for Income Protection, you'll need to provide information about your occupation, health, lifestyle, and income.


• Medical Assessment: Some policies may require a medical examination or access to your medical records to assess your health risks.


• Occupation Considerations: Your occupation can significantly impact your policy, as some professions may be considered higher risk than others.

• Choosing the Deferred Period: An important aspect of customizing your policy is selecting the deferred period. This is the interval between ceasing work due to illness or injury and when your insurance payments start. Options can range from 4 weeks to several months. Shorter deferred periods typically result in higher premiums, as the insurer would begin payouts sooner.


• Deciding the Level of Coverage: Another crucial decision is determining how much of your income you want to insure. While most policies cover between 50-70% of your pre-illness income, choosing the right level depends on your regular expenses and lifestyle. Remember, higher coverage levels will generally increase the premium cost.

• Initiating the Claim Process: In the unfortunate event that you're unable to work, the process starts by filing a claim with your insurer. You'll need to provide comprehensive medical evidence supporting your inability to work due to illness or injury.


• Undergoing Assessment: Your insurer will conduct a thorough assessment of your claim. This review process may include consultations with medical experts and an evaluation of your income, including any sick pay or other benefits you may be receiving, to ensure the claim meets the terms of your policy.

• Commencing Payment: Once your claim is approved and the deferred period has elapsed, the insurer will start disbursing payments. These payments are usually made monthly and are designed to substitute a portion of your lost income.


• Duration and Continuity of Payments: The payments will continue until one of the policy's termination conditions is met - either you return to work, the policy term expires, or you reach retirement age. This continuity ensures financial stability during prolonged periods of work absence.

• Sick Pay Provisions: Start by evaluating the sick pay benefits provided by your employer. Some employers offer generous sick pay schemes, which might reduce the immediate need for Income Protection. However, consider the duration of these benefits as they are often limited to a specific period.

• Financial Obligations: If you have substantial financial commitments, such as a mortgage, loans, or dependents relying on your income, Income Protection can be a wise choice. It ensures that you can meet these obligations even if you lose your income due to illness or injury.


• Savings and Emergency Funds: Examine your savings and emergency funds. If your savings are not sufficient to support you and your family during an extended period of illness or injury, Income Protection becomes more critical.

• Coverage Scope: Understand what illnesses and injuries are covered by Income Protection policies. Some policies have exclusions or limitations, so it’s important to choose one that aligns with your lifestyle and health risks.


• Cost-Benefit Analysis: Weigh the cost of premiums against the potential benefit of having a regular income during periods of incapacity. For some, the peace of mind and financial security offered by Income Protection outweighs the cost.

• Other Insurance Options: Compare Income Protection with other insurance products like Critical Illness cover or Life Insurance. Each has unique benefits and limitations, and one may be more suitable for your needs than another.

Deciding on Income Protection insurance should be based on a careful assessment of your employment benefits, personal and financial circumstances, and an understanding of the policy details. It’s a decision that should balance the cost of premiums with the potential benefits, considering your specific lifestyle and financial needs. Consulting with a mortgage and protection advisor here at Proper Advice can provide further insights and help you make an informed choice that best protects your income.