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Income protection (or income protection insurance) can pay out a regular income to you if you can’t work for an extended period of time due to illness or injury.
The amount paid out to you will be a percentage of your annual income, this could be up to 70%.
This can help you to cover essential financial commitments while you’re unable to earn your usual income.
Why not let Reassured Advice help you find the right income protection cover to meet your unique needs?
Reassured Advice can help you to compare quotes from the whole of market. Their service is FCA-regulated and quotes are fee-free, personalised and without obligation.
There’s no set list of illnesses or injuries that you’ll be covered for with an income protection policy.
This means you’ll be covered for a wide range of illnesses and injuries.
This differs to other policies available, such as critical illness cover, where a specific list of illnesses will be included in your policy and your illness must match the insurers definition in order for you to make a claim.
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When comparing quotes through Reassured Advice, an expert will be on hand to answer any questions you may have. This way you can ensure that the policy you’re taking out is exactly what you need.
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While income protection can help to protect you against a wide range of illnesses and injuries, there are some things that won’t be covered under your policy.
To find out exactly what you’ll be covered for, compare quotes for free through Reassured Advice.
An income protection policy works by paying out a percentage of your income to help replace lost earnings, while you’re unable to work, as a result of illness or injury.
You’ll pay a monthly premium to keep your cover valid and, if you become unable to work, you can make a claim on your policy.
In order to receive your monthly payments, you’ll need to wait for your deferred period to pass and your condition must meet your policies definition of incapacity.
The deferred period is the period of time you must be unable to work before your payments will commence.
If you’re still unable to work once your deferred period has come to an end then you’ll start to receive your payments.
These payments will continue until one of the following happens (whichever happens first):
There are some aspects of an income protection policy that you should be aware of:
Policy length - This refers to the period of time in which you’ll be covered, this is also known as the policy ‘term’.
Payment period - This is how long you’ll receive payments for. If taking out short term income protection, this will be capped at 1 - 5 years. If taking at a long term income protection policy, you could be covered until retirement.
Definition of incapacity - This outlines your eligibility for making a claim. Typically, there are three main definitions of incapacity:
Benefit amount - This is the amount that will be paid out to you after a claim has been made. Often referred to as ‘monthly benefit amount’ as you will receive your payments on a monthly basis.
Deferred period - This is the period of time that needs to pass, after a claim has been made, in order for your payments commence. Most common deferred periods are between 4 - 52 weeks.
Premium type - This refers to how you will pay for your cover. You’ll need to keep up to date with payments to keep your cover valid.
Common premium types include:
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How long income protection will cover you for will depend on the terms that you choose for your policy.
When taking out income protection you’ll need to consider:
How long you want your policy term to be?
The length of your policy is also known as the policy term and this will be how long you’re covered for.
This means that you’ll be able to make a claim at any time throughout this period and it can even be possible to make multiple claims during this time (each claim period will need to have come to an end before another claim can be made).
When choosing a policy term you may want to consider certain factors such as the length of your mortgage, how old your children are or how long until you reach retirement to ensure you’re covered for as long as necessary.
How long you want to receive payments for?
As well as choosing a policy term, you’ll need to choose how long you’d like to receive payments for.
Income protection can be taken out with a short-term or long-term payment period.
Short-term income protection will pay out to you for a maximum of 1 - 5 years whereas with long term income protection you could be protected full term (until you reach retirement).
No, income protection will not pay out to you if you lose your job.
This is because an income protection policy doesn’t cover unemployment or redundancy.
Income protection only pays out for illness and injury.
If looking for cover that will protect you in the event of unemployment, you may consider a policy such as Accident, Sickness and Unemployment (ASU).
Accident, Sickness and Unemployment isn’t something that’s currently offered by Reassured or Reassured Advice.
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No, you won’t be able to make a claim on your income protection policy if you’re still able to work.
As income protection is designed to help replace lost income, if you’re still able to earn the income that’s protected, it’s unlikely a claim will be accepted.
In order to make a claim, and receive payments, you must meet the definition of incapacity outlined in your policy.
Yes, income protection pays out in monthly (tax-free) instalments.
This is to mimic the monthly income that you would be earning if you were working.
Why not enquire with Reassured Advice about protecting your income? They can help you to compare quotes from the whole of the market to ensure you find your ideal policy.
No, income protection payments are tax-free.
This is why providers pay out a certain percentage of your income, rather than the total amount.
Income protection through Reassured advice starts from just 20p-a-day why not get in touch for your fee-free, personalised quotes.
Anyone who doesn’t have alternative sources of income, with financial commitments and/or a family to take care of could benefit from having income protection in place.
Income protection can reduce the need to rely on financial help from others, dip into your savings or make changes to your lifestyle when you’re unable to earn your usual income.
In particular, income protection may be a worthwhile investment if you’re self-employed.
This is because self-employed workers won’t receive sick pay from an employer, so income protection could help to provide much needed financial aid.
If you’re not sure whether income protection is the right choice for you, it’s always worth speaking to an expert.
The team at Reassured Advice can talk through your needs and provide you with all the information you need to help you make a decision.
Hopefully this article has helped to answer the key question ‘what does income protection cover?’
To secure the best income protection policy to meet your needs, it’s essential to compare multiple quotes.
Reassured Advice can help you to do this with their FCA-regulated broker service.
The team of experts can help you to compare quotes, guide you through the application process and be on hand to answer any questions.
Income protection through Reassured Advice starts from just 20p-a-day so why not get in touch?
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