INCOME PROTECTION

What is Income Protection and what can it offer you?

It is essentially an insurance to replace your income in the event of ill health or you becoming disabled and unable to carry out your current occupation.

We all hope and expect it won’t happen to us, however, the financial consequences can be disastrous, if you are unfortunate enough to be one of the unlucky people who are either involved in a serious accident or contract a lengthy illness.

The State Benefits paid to a sick person, when they are unable to work as a result of illness or some other disability, are inadequate to meet most people’s needs. Additional benefits, such as Income Support, are only paid if the level of savings of the claimant is very low. In addition to this, any other benefits are more or less discretionary and are becoming more difficult to obtain.

Income protection (which is usually called Permanent Health Insurance) provides a regular monthly income up to your normal retirement age or until you return to work.

Single women especially, who have the responsibility for large outgoings such as a mortgage, should consider income protection. Likewise, if you are married or living with your partner and your joint income is vital in contributing towards the monthly expenses, you should consider income protection.

So how does it work?

	Most companies offer a range of deferred periods, which are usually anything from 7 days to 2 years, depending on how long your employer would pay you if you are employed and absent from work due to sickness.
	The longer you wait before you receive your benefit, the lower the premium.
	After the agreed waiting period, should a claim occur, monthly payments are made to you, which will enable you to continue paying your bills and allow you to concentrate on a speedy recovery
	Payment continues until you recover and are able to return to work or the expiry date of the policy, which is usually your normal retirement age.
	The cost of the plan depends on your age, occupation and the waiting period which you choose.
	Some companies offer income protection plans which provide a tax free cash sum after the term of the policy if no claims are made, whilst other companies prefer to keep their premiums as low as possible without any associated investment into the plan.