Income Protection
Permanent Health Insurance
What would happen to your standard of living if you were unable to work due to illness or accident?
In 2007 over 2.68m
people were claiming incapacity benefit.
Source:
DWP Nov 2007
The State will not pay your mortgage in any case if you have over £8,000 in savings and the mortgage was taken out after 1st October 1995
How do income protection plans work?
Income protection plans are normally referred to as Permanent Health Insurance (PHI). They are designed to provide a replacement tax-free income if the unexpected happens and you succumb to long-term sickness or disability caused by illness or accident.
Benefit levels of income protection plans are chosen with a view to maintaining your standard of living.
How much cover can an income protection plan provide?
The amount of benefit you can be covered for by an income protection plan is normally determined by your salary. Up to 65% of your current earnings can be replaced by an income protection policy, although any income from state benefits, pensions or other sources will often be taken in to account when benefit levels are calculated.
Cover can also be obtained if you are not working, and the amount available will vary from company to company.
How long will the cover provided by an income protection plan last?
Most people set up their income protection policy to run to between the ages of 50 to 65. The cover is permanent, which means no matter how many times you claim on your income protection plan the cover will never be cancelled.
How long will I have to wait before before my income protection plan starts to pay out?
When you take out an income protection policy you choose the length of time you will wait between becoming ill and benefits starting to pay, with a minimum normally of one month. This can be extended to three months, six months or one year. This is known as the “deferred period”.
How much will it cost?
Premiums on income protection plans vary depending on age, sex, occupation, tobacco consumption and amount of benefit required. The term and deferred period of the income protection plan will also cause variations in premiums.
