Personal Protection
   Protecting Your Income
Our income is normally our most important asset.  The financial future of our families normally rests on it - could you cope if it stopped?

Many of us are employed and benefit from contractual sick-pay from our employers for as much as a year.  We also know that we can take state benefits if we're off sick for longer than this, and many of us never think any further forward than this.

If you have a family and commitments however you may find that after your employer's sickpay has finished your income on incapacity benefit can be woefully inadequate. For the majority of us our incomes are our most valuable asset and a significant period off work can be financially devastating.

Income Protection Insurance

Income Protection Insurance (also sometimes known as Permanent Health Insurance) is designed to pay a monthly income if you are unable to work due to sickness or accident.  Normally the policy will pay you for as long as you are out of work up to the policy end date which would normally be set as your retirement date.  This means that if you were incapacitated and never able to work again the policy could pay your income right up till your retirement.

There are some limitations however and these must be considered very carefully before taking out this type of policy - this is why we always advise our clients on which policy is genuinely the most suitable for them.

Income Protection - Frequently Asked Questions
How much income can I insure? Typically no more than 60-65% of your normal gross monthly income. However the benefit is normally paid tax-free.
How much income can I claim? Normally you will be asked to prove your income at the time you make the claim - if your income has gone down this means you may not be able to claim for the full amount you initially insured!  This is why it's important to review your policies when you change employment or income.  Some policies may let you claim a minimum amount regardless of recent income.
When can I claim? Most policies require that you be off work for a minimum period before you can claim.  This is chosen at outset, normally to coincide with your employers sick pay.  Three or six months is probably the most common, but some can start straight away.
Can I claim for involuntary unemployment i.e. redundancy? Some policies will allow you to select this as an additional feature but you'd need to think carefully.  Often involuntary unemployment can be difficult to claim for.  It's even more important to take financial advice if you think this option may be important to you.
I'm self-employed, can I still take income protection? You can take it, but we strongly advise you take professional financial advice to ensure you are able to claim on the policy when the time comes.  If we think you won't be able to claim then we will not recommend a policy.

Accident, Sickness and Involuntary Unemployment Insurance

Accident, Sickness and Involuntary Unemployment insurance, also known simply as "ASIU", is similar to income protection insurance in that it aims to pay a monthly benefit in the event that you can't work due to accident, sickness or involuntary unemployment.  Accident and Sickness cover is also available without the involuntary unemployment.

However, it is out opinion that these schemes are generally of less value than true income protection insurance. Take a look at the following comparison and you'll see why.

   Income Protection Insurance  Accident & Sickness Insurance
How much can I insure? Typically 60-65% of your normal
gross monthly income. 
Typically 60-65% of your normal gross monthly income limited to £1500-£2000 per month.
How long can I claim for? Normally until the end of the policy, which is usually your retirement date. Typically for a maximum
of 1-2 years.
Can I add Involuntary Unemployment Insurance? Sometimes, though we strongly advise taking advice before doing so.  It can be difficult to claim on as it normally only covers redundancy, and normally only pays for 12 months. Often, though we strongly advise taking advice before doing so.  It can be difficult to claim on as it normally only covers redundancy, and it normally only pays for 12 months.
What happens when I'm better and go back to work? The cover continues unchanged at the same price until the end of the policy regardless of how many claims are made. The cover expires after the first claim.  Re-insuring yourself after a claim can be very expensive.

Rather just speak to a financial adviser?

If you like to talk about income protection, do feel free to call us.

Telephone:   02920 009 479 

Or you can message us from this website by clicking here.