An income protection UK policy could ease your financial worries if you should lose your main income through unemployment or incapacity. If you should suffer one of these events you would still need to be able to find money for your outgoings and these could be numerous. Of course you will have to find the money to do the grocery shopping each month and this could be a tidy amount depending on how many live in the household. You would also have to find money for your rent and your utility bills otherwise you risk losing your services or even your home.

While an income protection UK policy is another pay out you have to make each month you can take your insurance with an independent provider. When you take cover with the independent provider you will be able to compare the cost of insurance and also the benefits of the cover. You could choose how much of your monthly income you want to protect, usually up to £1,500 or half of your gross monthly income and this amount would be agreed with the provider. It is then the income that you get back each month if you have to make a claim due to one of the events. The income is paid in tax free instalments once you have been unemployed or incapacitated for between the 30th and the 90th days. You could receive benefit for 12 months or some providers offer cover that would continue for as long as 24 months.

Should the provider you choose offer benefit over 24 months then of course the premiums would work out dearer than cover providing an income for 12 months. Should your policy not pay out until the 90th day then you would have to manage during this time without an income. You would also need to bear in mind that the benefit from your policy would cease once it had reached the term, if you were to have to claim for this length of time.

When considering income payment protection which is the policy described above you should not get it confused with a policy of a similar name which is income protection. Income protection pays out up to the age of your retirement if necessary but would not provide protection against redundancy. Therefore ensure that you are looking at the right type of policy for your needs.
Some generous providers will include carer cover in their income protection UK policy but you would have to check the benefits as not all do. If you have carer cover included in your policy it would provide an income in the event that a close family member were to become incapacitated. You would be able to take time from work to take care of them and still have an income coming into the home towards meeting your outgoings.

Choosing your income protection UK policy with care is essential if you are to get the policy you need with the benefits you want. If you take the time to compare the quotes with an independent provider you can make some of the biggest savings and you can check the length of time you need to wait to make a claim on the insurance and how long you would be eligible to make a claim.

To take out an income protection UK policy with the independent provider you can choose the percentage of your income you want to cover. The amount is agreed by your provider because it is the money you get back if you need to make a claim due to suffering from the events insured against. Your tax free income could be claimed once you have been unemployed or incapacitated for a period of time which is generally between 30 and 90 days. Some providers will date back the policy to day one of you suffering from one of your chosen events so this would need checking in the small print. Once you begin receiving payments you would continue to get an income monthly for 12 months or 24 months and then the income would cease.

You could be offered the option of choosing a 12/24 month policy and if this is the case you would have to take certain factors into account. One of these would be that a policy providing 24 months of cover would cost more than a one that pays 12 months of benefit. 12 months can be a long enough period for you to have made a recovery or found work but your policy would cease regardless of your current circumstances at the policies end.

With protection providing an income each month and there would not be the worry of having to make changes to your lifestyle to be able to find money for such as your rent/mortgage, utility bills such as gas and electric or your family’s food bill for the month. Of course these are just some of the essential outgoings that you may have coming in each month and so the income would be there for you to spend as you wished.

You can also choose to tailor your income protection UK policy so that you are only paying for protection that you need as the events you choose to cover would reflect on the cost of the policy. You can of course take cover for both unemployment and incapacity together and could make a claim if you lost your income to either of these events. If you do not want protection against incapacity you might choose to cover redundancy alone. Alternatively you might only want to protect against incapacity alone and with the independent provider you can.

An income protection UK policy would provide an income replacement that could make life a great deal easier during your unemployment or incapacity. If you were to become a victim to one of the events you had chosen to cover then you would be able to claim and receive an income for a period of time which would be dependent on the provider once you had been unemployed or incapacitated for a certain period of time.

To take out a policy with a standalone payment protection provider you would have to choose the amount of your monthly income you wanted to protect. This is the amount you would get back once you had been unemployed or incapacitated for a period of between the 30th and up to the 90th day. Some providers will date back the protection to the first day that you lost your income to unemployment or incapacity so you would have to check the small print offered by the provider. Payments would then continue for either 12 months or 24 months before then ceasing regardless of your situation.

You could also choose the events you want to protect against. While you can take a policy out to protect against unemployment and incapacity together you might just want a policy to safeguards against the chance that you could suffer incapacity alone. You could also decide that you just want protection against redundancy if this suited your lifestyle better. This would go towards determining how much you had to pay for the premium as would your age when you applied for the protection and the amount you chose to protect of your monthly income.

With the income from your income protection UK policy you would be able to use it as you would your income when working. This means that you can spread it out as you want towards meeting any repayments that you had to maintain. You could for example choose to use a portion of it towards keeping food on the table for your family. You would also have an income that can be used towards meeting your utility bills which would keep the home warm and lit. In fact you would have money towards meeting any repayments that dropped through your letterbox.

If you did not have an income to fall back onto then you could find life very difficult during a time when you need to be concentrating on making a recovery or be out there looking for work. Of course you could try making some drastic cutbacks to your lifestyle in order to be able to try and find the money needed to keep all your essential outgoings maintained. Yet even when making these cutbacks you could still find yourself short and you then have to face the consequences of falling behind on payments. With an income protection UK policy behind you your worries would be lessened.

If you choose to buy your income protection UK policy with an independent provider you can make huge savings on the cost of the policy. Independent providers offer quotes for the insurance which are based on the amount you chose to protect, the level of protection needed and your own age when taking out the protection. They are competitive which means comparing is essential if you want to get the best deal on your policy.

Your first decision when applying for cover is choosing how much of your income you want to insure. This is pre-agreed by your provider as all will set a limit, and is the amount you get back each month for the term of your policy. The income is paid tax free on a monthly basis, should you have to claim, and would last for either 12 months or 24 if you were to remain unemployed or incapacitated for this length of time. There would be a deferment period before making a claim which with some providers could be just 30 days and with others it might be 90 days. Some standalone providers will also date back your cover to day one of you being unable to work or from you being incapacitated so this is worth checking before taking out your cover.

The money supplied from your income protection UK policy would go a long way towards you being able to continue to service your essential outgoings. Your outgoings could vary depending on your lifestyle, you might have rent or mortgage commitments and you would definitely have utility bills that needed maintaining and a monthly food bill. With your cover to fall back onto these would not be a worry, you could also have many more outgoings which you might service with this income. If you have nothing behind you as a safety net drastic changes would need to be made and these would have an effect on everyone in the family.

Life could become very miserable and even then you still might not have enough money each month.
You would have to check the terms of any income protection UK policy that you were considering to ensure that the exclusions would not stop you from taking out the insurance. Just as with any type of insurance checking the small print is essential as there can be limitations on the cover which mean it is not suitable for all. Any ethical payment protection specialist will ensure that you have access to the information needed to determine the suitability of cover. Income cover can and does work extremely well for many individuals but if for example you were suffering an ongoing illness when applying for the protection you would need to take care and check. The self-employed would also have to do the same as while they could take out a policy there would be certain conditions that have to be met.

An income protection UK policy could make your life a great deal easier to manage if you were to suffer unemployment or incapacity. If you suffered from one of these events you would be left without a regular income and still have to maintain your outgoings. With insurance behind you at least for the term of the policy you would have a substantial sum of money coming in towards ensuring you would be able to service your outgoings.

You could search online with an independent provider for an income protection UK policy and by doing so you would get competitive premiums. To take out a policy you would decide on the amount of your income you want to protect and the provider would pre-agree to this amount, up to a limit. If you then become a victim of unemployment or incapacity you would be able to make a claim on the insurance after the deferment period. This could be between 30 and 90 days of you being made redundant or from becoming incapacitated. Once the protection had begun to payout you would then have an income to rely on for between 12 months and 24 months depending on the provider.

Protection can be taken for your income to insure against the possibility of unemployment and incapacity together. However your circumstances might dictate that you only need to insure against unemployment alone. You could also just need to insure against incapacity alone and with a standalone provider you can. The level of protection taken would go towards determining how much you would pay for the premiums along with your age and the amount chosen to protect each month.

Along with income cover you might want to consider the two other forms of payment protection. Mortgage payment protection would supply you with an income towards keeping your mortgage repayments maintained each month. This is essential if you are to avoid falling into mortgage arrears and risk losing your home to repossession. If you have loan repayments to service then you could give some thought to loan payment protection. This policy would ensure you had a substantial sum each month towards meeting your loan repayment. Missed loan repayments could see you losing your home if the loan was secured. Any type of loan debt would affect your credit rating and it is essential to keep this in good order if you want to borrow again at anytime in the future.

You would have to check the terms of any income protection UK policy you were considering taking out to ensure that the exclusions would not prevent you from being eligible to claim. Some providers may add in many exclusions, while others just include the most common of exclusions in their protection. Always compare them against your lifestyle before taking out any payment protection policy.

Income protection UK insurance is very much a necessity, the term referring to a number of similarly named policies that are designed to help out the policy holder in times of need. This leads to some confusion in the market, as many of them are similarly named. Here we help the consumer become aware of the differences, as well as delving into the recent history of the market, in order they can be fully aware before committing to a product.

To start with, let’s have a look at what income protection, UK style, actually is. It comes under an umbrella of benefits that are generally known as payment protection insurance, or PPI for short, and are also referred to as ASU, or accident, sickness and unemployment insurance, leading to greater confusion for the uninitiated.

The aim of payment protection insurance is to provide a safety net for those who find themselves out of, or unable to, work at inopportune moments; a mortgage or a loan, or a combination of both, or even a credit card can be helped by income protection, and it will come as a monthly tax-free payment to the consumer should the criteria for the policy be met. The policy will be paid for by the policy holder contributing to a plan, which is in turn invested to form a pool of money that will form the payments if needs be. It is imperative, however, that we highlight some important, recent goings-on in the payment protection insurance world.

There is a commonly held myth that if one takes out a loan, you are obliged to take the ‘package’ payment protection insurance that comes with it, whether income protection or otherwise. While it is so that lenders will insist upon some form of insurance, there is no obligation whatsoever for the buyer to do this, and he or she is known to be better served by looking to an independent, stand alone provider for the PPI element of the deal. Indeed savings of up to 40% for mortgage protection, and a massive 80% on loan protection have been made by going to an independent provider rather than a high street provider.

For many, going to a high street name, one familiar from the television or newspaper, may seem like the most convenient and reliable route to buy PPI products; however, this has proved not to be the case, as following a super-complaint in 2005, the Office of Fair Trading and the Financial Services Authority took it upon themselves to begin an investigation into methods of selling such policies on the high street.

They discovered a number of incidences of policies being mis-sold. In some cases, they had been sold to people who could not possibly claim on them – those already suffering illnesses, the retired and part time workers – and the result was a series of fines levied on some very well known high street organisations.

In addition, the FSA has looked very closely at the methods of selling, and is expected to issue a raft of revisions as to how PPI can be sold; it will no longer be lawful to sell it at point of sale of loans, and there will be a week period after sale of the loan during which it will be unlawful for sellers to sell payment protection insurance to the borrower.

Income protection, UK, is very similarly named to another product, this being income payment protection. The fist is a name used for along term payment plan, sometimes stretching payments up to retirement age, while the latter is a short term – usually one or two year – payment plan designed for temporary set backs. In each case, the aim is similar, but the criteria can be somewhat different.

There are many things that need to be considered carefully when going down the route of looking for income protection in the UK; the first is to understand exactly what the policy covers, for while some include cover for redundancy, sickness and accident, many omit the latter two and are somewhat less expensive. However, including accident and sickness, while costing more, gives a much broader range of cover, and is considered worth the extra monthly outlay it will incur.

Furthermore, as we have already said there are differences in the time that different policies will pay out for; some cover a duration of twelve months, others two years, and the more expensive ones will cover one until retirement in some cases. These policies, however, will only cover incapacity. In addition, the buyer would be wise take note of the point at which the policy kicks in; some will begin to pay thirty days after the point of redundancy, others at ninety days, and many will backdate payments – once begun- to the first day, while others leave the intervening period unpaid.

The need for a good income protection scheme in the UK is clear, for one only needs to turn on the television each day to read of job losses and company closures, of bankruptcies and further. With the housing market in apparent freefall the number of repossessions is increasing, and this is equally so for other items on which one may have secured a loan.

Being able to count on at least some guaranteed help is, after all, a comfort, and for those with families such comforts would be welcomed at any price. The economic downturn shows no signs of slowing up, after all, so we can consider that what was once a safe and secure job needs to be treated with some suspicion and uncertainty.

This is not to say we should all consider we are going to lose our jobs, but that it is wise – now as well as always – to consider income protection UK cover as it can be very beneficial should the unexpected occur. The unexpected may, after all, include illness or incapacity by accident, and if one is well covered for those eventualities it is a bonus. Believing it won’t happen to you is no comfort, but a decent income protection policy may prove a shrewd investment.

Income protection UK style often has all the appearance of a surprisingly half-hearted, not to say careless, matter of concern. The government tinkers with welfare reform by making the slightest of adjustments to Jobseeker’s Allowance for the unemployed; statutory redundancy pay for those who lose their jobs; and incremental adjustments to statutory sick pay for those who are incapacitated for work. Yet the same government has recently conceded that the present recession is the worst “for over 100 years” and still only around one in ten individuals have any personal income protection plan.

Probably the most startling admission from any government minister on the depth of the UK’s current economic woes was made by one of its most senior members, Ed Balls MP, whose comment that “this is the worst recession for over 100 years” was reported by The Independent newspaper on the 10th of February 2009. As the newspaper pointed out, this would make the current state of affairs even worse than that of the Great Depression of the 1930s, when unemployment in some parts of the country hit 70%.

The astonishing prediction comes in the same week that the same newspaper revealed that the government is merely looking at – rather than acting to change – the levels of redundancy pay available to dismissed employees. For those under the age of 41, this is currently the equivalent of one week’s pay for each year of service (up to a maximum of 20 years), but with a cap on the maximum payout of £7,000.

For those about to lose their jobs – with total unemployment rising from the present two million to at least three million – during the course of this year, therefore, government intervention is likely to do little to bring any income protection UK comfort.

More surprisingly, perhaps, is the apparent reluctance of employees themselves to take matters into their own hands and to arrange their own income protection. According to a detailed survey* last year of employee’s expenditure, savings and insurance cover, only one in ten appear to have made any provision at all for personal income protection.

Yet income protection insurance is one of the most simple and straight forward personal safety nets to put in place. In return for a remarkably modest monthly premium, the policy holder can be assured of a regular, tax-free, replacement income whenever he or she is incapacitated (as a result of an accident or illness) or unemployed after being made compulsorily redundant. This provides a reliable way of ensuring that a realistic replacement income (the level of which can be determined by the policy holder) is immediately available in times of crisis.

An estimated 90% of the population still in work, therefore, could stand to benefit from this particular form of income protection UK style.

* Yorkshire Building Society – The Protection Gap, July 2008

Many people are quite properly concerned at the moment about their incomes. How would they cope with a sudden and unexpected loss of the income on which they had grown accustomed? The question on many lips, therefore, is what is the best source of income protection UK?

Those who have grown up within the legend and traditions of the welfare state, for example, might be tempted to believe that the government will always step in to help the individual when things go wry. This may be true, but only to a limited extent and probably to far less comfortable a degree than many people believe. If you have been made redundant and need to seek Jobseeker’s Allowance, for example, the maximum rate will still only provide £60.50 a week. If you are off work because of an accident or illness, you may qualify for statutory sick pay, but once again, this is currently a fairly meagre £75.40 and, critically, is payable for only 28 weeks (less than 7 months).

Some people might also put their faith in the generosity of their employer continuing to pay their normal salary if they have an accident or are off work for an extended period of sick leave. Surveys* carried out last year, however, revealed that only 37% of employees enjoy the benefits of an employer’s long-term (more than six months) sickness scheme, while half of all employees have no such income protection at all.

When it come to redundancy, the employer is even less likely to be a reliable source of income protection UK. Traditionally, trade unions and staff associations have been able to negotiate what were apparently quite generous redundancy packages. In the current economic climate, however, such generous packages are largely a thing of the past and many employees will be left simply with the statutory redundancy provisions. These are based on the employee’s age and length of service with the employer, but even at their best will realise an average of just one week’s pay for every year worked, with most companies setting a cap on the maximum number of weeks at 20.

Another potential source of income protection UK could take the form of individual savings. The surveys already referred to also revealed that the average level of savings held by individual employees is £2,474 and, on the basis of average weekly expenditure, would last for approximately 52 days. Of course, many people have considerably less savings and their ability to cope with a sudden and unexpected loss of earnings would be correspondingly shortened.

The conclusion to be drawn from this brief review of the alternatives, therefore, on the best source of income protection UK is that this lies in simple and straight forward income protection insurance, which will pay out a regular, tax-free, replacement monthly income in the event of the policy holder being incapacitated to work or unemployed.

It is never a pleasant subject to think about, but problems and troubles can hit anyone at anytime and without notice – and these troubles sometimes result in the loss of income. Many people look to protect themselves and their wider families by purchasing insurance against those unforeseen events that could take away their ability to earn money. There are several ways of taking out cover of this type and sometimes these policies are known as income protection UK.

This type of cover is often provided through type of policy called PPI (Payment Protection Insurance) or ASU (Accident Sickness Insurance). These policies are aimed at ensuring that an individual receives some money in the event of them being unable to work due to sickness, accident or non-voluntary unemployment.

Typically they operate on the traditional basis that the policyholder pays periodic premiums and then makes a claim should one of the above causes prevent them from working and obtaining income. The payments typically commence 30 or 90 days after the ‘cause’ of the claim and provide regular monthly income until such time as the policyholder is able to recommence work or the maximum cover period had been exceeded.

Income protection UK is usually sold through a protection insurance/ASU policy from one of two sources.

The first route is the banks, building societies and some loan companies. In the past these institutions offered income protection type policies at the ‘point of sale’ – in other words during the loan or mortgage application process the company would offer this insurance. This practice was not always popular as some people felt under subtle pressure to take the insurance as a way of increasing the chances of success for the loan application itself.

Recent planned regulation changes in the UK could mean that although banks and loan companies may still sell this insurance, they may have to wait until 14 days after loan approval before offering the policy.

The second route to get this insurance is through the independent providers. Policies from these sources may offer significant price reductions over similar policies offered by a loan company.

Not all applicants will be eligible. Part time workers, some categories of the self-employed, people in high-risk professions, those with existing medical conditions or those without significant recent work history, may all find it difficult to obtain cover. These policies also usually exclude claims for loss of income arising from personal choice such as resignations, career changes or in some cases, dismissals. In some circumstances they may also exclude people engaging in dangerous pastimes.

All insurance policies carry conditions and exclusions and these should be read carefully before a purchase decision is made and any concerns or doubts clarified.

Income protection UK cover is an important subject relating to the protection of the individual and their family and their day-to-day peace of mind. It is therefore important to select the right insurance policy that offers cover that is adequate for the policyholder’s needs. It is usually advisable to look around carefully and take advice before making a final selection.

The cost of income protection UK policies does not have to be exorbitant. Depending on where you shop you can get premiums from as low as £2.51 per £100 of cover. The real question should be can you afford to be without cover.

The policy is designed to provide financial assistance if you were to lose all or part of your income due to involuntary situations such as unforeseen redundancy, sickness or if you had an accident.

All three of these events could lead to financial instability if there are no replacement funds available. If you don’t have any savings, or you can’t rely on family, friends or state handouts then you might want to consider protecting your income.

Please note that we are not referring to the protection product that only covers sickness and accident and which can pay out for years.

In this article we are talking about the shorter term policy which pays a tax free monthly income for 12 or 24 months.
The actual maximum period will depend on the terms of the provider you choose.

Once in receipt of the payment, you can use it to cover any payment or expense you like. The other benefit is that the policy provides peace of mind. You just don’t know what life will throw at you. If you were to fall ill or lose your job, how will you maintain your mortgage or rent payments? If you have loans and credit card bills you could end up with missed mortgage payments and a poor credit profile.

Thankfully with an income protection UK policy in place you won’t have to spend a minute worrying about things like that.

Things To Note
The policy will not pay the equivalent to your salaried income as a benefit. Providers carry maximum benefit levels which restricts the maximum payment to a gross percentage of your salary.

Before you can apply for a policy, you will need to have at least six months employment history. In addition you will need to meet the entry requirements and take note of any exclusion that comes with the policy.
This is a very important step as you need to make sure the policy will cover your circumstances. Take time to read the terms and conditions carefully before you take out the policy.

Providers may not always take the time to explain how the policy works so you need to do a bit of homework also.

We mentioned earlier about the cost of premiums, well generally the independent providers will have lower premiums than their high street counter parts

If you need to make a claim most income protection UK policies will have a 30 – 90 day deferment period.

Summary
So now that you’ve seen the benefits of having an income protection UK policy can you afford to be without one? Due to an ailing economy the risk of redundancy is quite high and while you can’t predict the future you can certainly prepare for it.