Income protection insurance:
- Provides regular payments that replace part of your income if you’re unable to work due to illness or an accident.
- Pays out until you can start working again – or until you retire, die or reach the end of the policy term – whichever is sooner.
- Typically pays out between 50% and 65% of your income if you’re unable to work
- Covers most illnesses that leave you unable to work – either in the short or long term (depending on the type of policy and its definition of incapacity)
- Can be claimed as many times as you need to while the policy lasts.
There’s often a pre-agreed waiting (‘deferred’) period before the payments start. The most common waiting periods are 4, 13, 26 weeks and a year. The longer you wait, the lower the monthly premiums.
It’s not the same as critical illness insurance, which pays out a one-off lump sum if you have a specific serious illness.
Income Protection Insurance is especially valuable for those who rely on their income to cover living expenses, loans, and other financial commitments. It provides peace of mind and financial stability during periods of unexpected health-related work disruptions.
As with any insurance policy, carefully reviewing the terms, coverage details, waiting periods, and premiums is essential to ensure that the policy aligns with your needs and circumstances.
Consulting with a financial advisor can also help you make informed decisions.
