Income Protection Insurance

Income protection insurance provides a regular income in the event that you are unable to work due to sickness or disability

Income protection insurance, also known as permanent health insurance, provides a regular income in the event that you are unable to work due to sickness or disability. This financial support continues until you return to work or retire.

The amount of income you can claim typically ranges from half to two-thirds of your pre-tax earnings from your usual job. This is due to deductions for any state benefits you may be eligible for, and the income from the policy is tax-free.

There is usually a waiting period of at least four weeks before you can start receiving income protection payments, although it may be as long as two years after you stop working. This waiting period allows for potential sick pay from your employer or statutory sick pay for up to 28 weeks.

It’s important to consider other types of illness insurance, such as critical illness insurance, before deciding on income protection insurance. Comparing different options will help you choose the most suitable coverage. For more information, refer to additional resources on illness insurance.

Important considerations

  • Verify if your employer offers income protection insurance as a workplace benefit
  • Assess if you already have coverage for serious illness through another insurance policy or mortgage
  • Evaluate if your savings could serve as a safety net instead of insurance, taking into account potential long-term health issues or unforeseen emergencies
  • Explore various illness insurance options to determine the best fit for your needs. For instance, critical illness insurance may be a more cost-effective alternative to income protection insurance, albeit with limitations on covered illnesses and duration
  • Understand that the premiums for income protection insurance can be substantial, and there is no refund if you never make a claim
  • Thoroughly review the terms and conditions of any insurance policy to ensure it aligns with your requirements, including what is covered, when you can claim, and the expected pay-out

Always make an informed decision when selecting insurance coverage to safeguard your financial well-being in case of illness or disability.

Are there any exclusions?

Health insurance policies may not cover every type of illness, and you may not be covered for pre-existing medical conditions, which are illnesses that you or a family member had before. Insurers consider your family medical history, and while some policies cover existing medical conditions, others may not. Your insurer should clearly explain any conditions attached to the policy based on your medical history before you sign up.

It’s important to understand if you will still be covered if you can work in a different capacity than your current job. Some policies may not allow claims if you can work in another role. Review your insurance policy to clarify this aspect.

Regarding pay-out timing, most policies require a waiting period of at least four weeks after you stop working before payments begin. Some waiting periods can extend up to two years. Premiums may be lower if you can wait longer before making a claim.

Ensure you know the exact amount you’ll receive in a claim, as it may be influenced by other sources of income like state benefits or other insurance policies. Verify whether payments will increase annually to match the cost of living.

Insurers assess the risk level of your job when determining coverage and premiums. Job risk assessment can vary among insurers, so understanding how your job is categorised can help you find more affordable premiums.

Fully disclose your and your family’s medical history to the insurer. Omitting information may lead to a claim denial.

If you have a pre-existing medical condition, seek an insurer willing to cover it, even if it means higher premiums. Be transparent about engaging in risky hobbies or lifestyle choices like smoking, heavy drinking, or drug use to avoid potential claim issues.

You can send personal information directly to the insurer’s medical officer if you prefer not to discuss sensitive details with the policy seller.

Individuals in poor health or with high-risk jobs may face challenges in securing income protection insurance or may encounter higher premiums.

Income protection insurance costs are influenced by factors such as age, health status, occupation risk level, hobbies, lifestyle choices, waiting period, and willingness to work in alternative roles if unable to perform your current job.

Most policies allow a 30-day window to cancel and receive a full refund. After this period, refunded amounts may be less. Review your policy’s terms and conditions carefully, or seek assistance from our team of experts.

Speak to our experts

With access to 1000s mortgages from over 90 high street lenders, we can help you find the right mortgage. Our five-star Google reviews back this up. Call us now and speak to a member of our experienced team.

Frequently asked questions

Do I need income protection insurance?

What is income protection insurance?

What’s the difference between family income benefit and income protection?

What’s the difference between income protection and critical illness?

Because we play by the book we want to tell you that…

For insurance business we offer products from a choice of insurers. Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

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