It replaces part of your income (tax free) if you are unable to work for a long period of time because of illness or disability, and will continue to pay out until you can return to some kind of paid work or reach retirement, whichever is sooner.
It has a waiting period before it will start to pay out. The longer you agree you’ll wait, the lower your premiums will be, so it is important you find out what income you can get from your employer, and other insurance (such as mortgage payment protection insurance) in the event of illness or disability.
This cover might not be available to you if you have existing health problems or a dangerous job
Important things for you to think about
If you are an employee and you fall ill, your employer might pay you your full pay for a few weeks or months. By law, an employer must pay most employees statutory sick pay for up to 28 weeks, though this will probably be a lot less than your full earnings. After that, you would probably have to rely on State benefits.
State benefits are not generous. You would probably see a substantial drop in your income if you were out of work for more than a few months because of illness or disability.
Insurance aims to put you back to the position you were in before you suffered a loss. But it does not allow you to make a profit out of your misfortune. So the maximum amount of income you can replace through insurance is broadly the after-tax earnings you have lost less an adjustment for State benefits you can claim. This usually translates into a maximum of, say 50% to 65% of your before-tax earnings.
Check whether you already have protection in place in case you get incapacitated, and for how long that protection would last. For example your employer may have an income protection scheme in place you can benefit from, or you may have a payment protection or critical illness insurance that covers your mortgage.
Income protection for life’s essentials
Have you ever worried about how you would cope financially if you were unable to work due to an accident, sickness or even unemployment? No need to worry, we’ve got a policy for that.
I have a wide range of protection products that cover most eventualities.
For example, policies which are not tied to a mortgage, loan or any other credit agreement. Policies that are designed simply to protect your income, that pay out a monthly benefit to help cover your essentials and outgoings if you are unable to work due to accident, sickness or unemployment.
Mortgage Payment Protection Insurance
How would your continue to meet your mortgage payments if you were unable to work due to an accident, sickness or unemployment? No need to worry, we’ve got a policy for that.
We have access to policies for new borrowers (those whose mortgage agreement, or re-mortgage agreement has been in force for 30 days or less). It’s designed to help you to continue to meet your mortgage payments.