Something to think about?
- How long could you live off your savings if you were unable to work due to a serious illness, disability or accident for a long period of time?
- How much would the state provide if you were to suffer a serious illness, disability or injury which meant you couldn’t work for a long period of time or indeed ever again?
- Would your family be able to help and if so, for how long?
Currently (as of April 2013) state benefits will pay £85.85 per week for a maximum of 28 weeks. This assumes you are in fact entitled to claim. Is this sufficient to pay your mortgage or rent, bills or provide for your family etc?
Income Protection insurance will pay you a tax free monthly amount until your selected retirement age (this is usually between 50 and 70) if you are unable to work due to an illness or disability.
The monthly cost is calculated taking in to account your occupation, health, age, selected retirement age and the amount of cover taken. When taking out cover, you need to decide how long you will need to be off work before the benefit is paid. This is known as the deferred period and is usually 4, 8, 13, 26 or 52 weeks. It is also possible to cover from the 1st day of illness or even after a week.
It is also possible to protect future benefits against inflation. The level of benefit you take today will not be worth the same in 10 years time so protecting against inflation is definitely worth considering. This does mean premiums will also increase if you choose this option each year.
Clients need to ensure they do not over insure and our advisers offer advice and guidance all the way through the process.
Income Protection Insurance can also be known as Income Replacement Cover or Income Insurance but should not be mistaken for Accident, Sickness and Unemployment Insurance (ASU). Income Protection provides a long term replacement of income resulting from an accident, illness or disability. ASU provides short terms cover, typically for up to a year for accidents, sickness and redundancy.
For more information regarding the differences between these policies, please call free on 0800 043 0413
Who can take out Income Protection Insurance?
- Self Employed
- Company Directors
- Part time employees
- Home makers
For more information, please call on 0800 043 0413
How much cover do I need?
Our advisers are available to offer advice and guidance as it is important that you do not over insure or over commit yourself. Typically, you can cover for 50% – 65% of your gross annual income. Under current UK tax legislation; and benefits are paid free of tax.
We recommend that you work out how much money you would need per month to meet your financial commitments as a starting point. Many of our clients insure around 50% of income although some decide to only cover mortgage payments. For advice on all aspects of Income Protection, please contact one of our advisors.
Income Protection Insurance or Accident, Sickness and Unemployment Insurance (ASU)?
These types of plans are often confused by people. ASU protects against accidents, sickness or redundancy for a short period of time, usually for up to two years. Income Protections does not cover against Redundancy/Unemployment but does provide long term cover for illness and disability.
Full product information is available on request and can be emailed to you, please call on 0800 043 0413 or email us.