Income Protection UK Explained

An income protection UK policy is designed to pay you an income typically for a period of 12 months to a maximum of 24 months. At any time, you could find yourself unable to work due to long term illness; injury; or, involuntary unemployment. And this is where the cover can help, by providing a tax free monthly sum that will help replace your lost earnings. If you were to go back to work within that period, payment will simply cease.

Although they are quite similar, Permanent Health Insurance (PHI) should not be mistaken for the income protection we are discussing in this guide. A PHI policy will pay a permanent income until a selected retirement age which is usually between ages 50 and 75 and does not cover unemployment.

An income protection UK policy is designed to ensure that you can maintain your usual standard of living and is not linked to your mortgage. The conditions under which payment is made includes involuntary unemployment such as redundancy, accident or illness. The product basically can be used for whatever purpose you wish – it can l keep food on your table, clothes on your back and a roof over your head.

Income Protection UK from Burgesses

The answer to this question depends on your circumstances. If you are employed full time and your salaried income is all you have to pay your monthly commitments, then definitely yes, you need to seriously consider an income protection UK policy.

Life is very uncertain; you never know what will happen when you get up each day. Combine that with an unstable economy and the number of unfortunate events that could happen just increased. So why not protect yourself and your loved ones from the fall out of unemployment, accident or prolonged sickness.

Most income protection UK policies have slight differences based on the lender, but their general features are listed below:

• You have the option to choose your level of benefit. Because the plan is not linked to your mortgage and once you know the maximum benefit levels of your provider, you could end up with a tidy monthly income from your policy
• There are maximum limits which vary based on the provider. So take into consideration your salaried income and try to work out how much cover you’ll need. In the event of a claim, the last thing you want is to have too little income to survive
• If you choose a higher benefit level, this will be reflected in the level of premium you pay, so bear this in mind when making your decision
• The underwriting criteria does not penalise you if you smoke. A fact like this is irrelevant in making the final decision on whether or not your application is accepted
• You do not have to pay high premiums just because you are older. This fact may vary from provider to provider so be sure to ask the question
• The amount you are paid is not subject to tax so you can enjoy 100% of your income
• Because the policy will not pay you the full amount of your salaried income, you need to ensure you can survive on the income you receive.

The main benefit has to be the peace of mind that comes with an income protection UK policy. With this insurance in place, even if you lost your job, you’ll be able to maintain your standard of living.

You can’t always rely on friends, family or even the State for handouts. These options are just not reliable. With friends, they may not have any spare cash to help you and as far as government benefit goes, if you do manage to qualify, then there is no way to know if the amount you receive will keep you clothed, fed or housed.

• You won’t have to worry about ruining your credit profile. You will receive a monthly income from your policy so there should be no missed payments, defaults or county court judgements arising from your involuntary unemployment
• You won’t have to worry about things like repossession because your replacement income will take care of your mortgage and other monthly commitments

Income Protection UK

Getting quotes from independent providers should be a priority. The standalone providers tend to offer the same level of protection at a much lower rate than the high street providers.

In addition the experience may be a whole lot nicer. Too often mortgage lenders try to pressure consumers into choosing their product while others add on the insurance premiums to the loan automatically.

Don’t feel pressured into buying from the high street; see what the independent providers have to offer first. More often than not, you save a lot of money on your premiums.

There are so many providers on the market; it may be difficult to make a choice. To ensure you end up with a product that suits you, look for providers who are regulated by the industry watchdog.

You may be aware that recently the Financial Services Authority (FSA) and the Office of Fair Trading (OFT) had to investigate the market due to numerous complaints from consumers. In the end some well known providers on the High Street were fined for mis-selling. The providers were not taking the time to explain the product terms and conditions to potential consumers. And policies were sold to many people who could not claim on them.

To avoid being a victim, make sure you ask as many questions as you can about the policy and how it fits in with your circumstances. When you get your policy, read the terms and conditions within the cooling off period so if you want to cancel, you’ll be well within your rights to do so.

Once you’ve covered all your bases, if you need to make a claim on your income protection UK cover, you should have no problems being successful.

Having an income protection UK policy is very useful. Even though it may be the last thing on your mind when you are employed, it could prevent you from financial ruin should you lose your job or become incapacitated.