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Income Protection

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1. About the Income Protection you are interested in

£1000
5Years

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What Is Income Protection

Income protection comes in various forms; a very basic description is that it works as a safety net providing an income should you stop receiving a wage or form of income, due to an illness or injury. It is there to make sure you have a flow of cash when you need it most, so you are able to continue paying your household bills and expenses even if something unexpected happens.

How Does Income Protection Work?

It provides a weekly or monthly tax-free income. This is to replace any lost earnings when you are unable to work due to an illness or injury. The plans have no exclusions, so it doesn’t matter what illness causes you to stop working and can run for any length of time. This means it could be paying out for 6 months or even 16 years. Although they will stop paying out when you reach the age of 70, and can be more expensive as there is no payment cut-off before this.

One of the best aspects of income protection is that once the policy is in action it cannot be withdrawn by the provider, so long as you maintain payments. However this isn’t the case with accident, sickness and unemployment insurance.

Accident Sickness and Unemployment

You are able to take out either just an accident and sickness plan or you can add redundancy protection to the plan, creating accident sickness and unemployment cover or ASU. It provides a guaranteed tax-free income, in addition to any other benefit you may receive. In most cases ASU can be claimed for 12 – 24 months. Some insurers will also allow you to determine the length of the period before you start receiving the income, it is usually after one month although making this period longer can decrease the cost of your policy.

Considerations

A plan like this takes away the financially worry that unforeseen job loss can cause. It’s important to note that jobseekers allowance can be as low as £53.45 a week, which is not enough to sustain a family. The ASU payment covers a percentage of your salary and offers peace of mind that you can continue paying your mortgage, bills or credit payments. Although it’s important to note that these plans have medical exclusions, and they also need to be renewed every couple of years. At this point the price can be increased by the provider or the policy withdrawn.

Redundancy

Unpredictable times have meant that job losses are common place, unemployment stood at 2.68 million in 2012. If you are worried about your financial stability adding this form of protection to and accident and sickness plan will at least mean vital bills are paid. If you have been with a company for a long period of time you may get a pay out from your employer so you may only need accident and sickness insurance. However it’s important to note that statutory redundancy isn’t generous and may only cover you a couple of months.

Honesty

It is important to be honest with your insurance provider and adviser. If there is a realistic foreseeability that you will be made redundant your policy could be deemed invalid. This definitely applies if you have been told that your jobs security has been questioned or if your company is reshuffling job positions, and even if the company you work for is reported to be in trouble.

Are the Payments Guaranteed?

PPI providers are covered by the government backed Financial Services Compensation Scheme. If they go into default for any reason you are protected. Normally the FSCS will find another provider to take over your policy if you have ongoing claims.

Where Can I Find the Best Deal?

It is always important to get advice before buying an insurance policy to make sure it will provide for your specific needs. You also need to shop around to get the best deal Quotesupermarket.com can provide you with both of these. Find out more about how income protection can keep your family protected by speaking to an adviser today. You can find a range of cheap quotes quickly and easily because they will search the best providers on your behalf.


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