Protection for your income and financial commitments.
Income Protection policies are designed to provide the policyholder with a replacement regular monthly income in the event of a long-term sickness, injury or disability. Payments are usually made when the policyholder either cannot undertake their own, or any job.
The amount of cover is based on a percentage of your gross earnings and is suitable for both employed and self-employed people.
There is no limit on the number of claims you can make and, if you are never able to work again due to illness or injury, the benefit will usually be paid until the earliest of your selected retirement age or for the term of the policy if earlier.
Most people would not be able to maintain their standard of living if they had to rely on benefits from Statutory Sick Pay and Employment and Support Allowance (ESA) so Income Protection could form a key part of their financial protection needs.
Anyone between the ages of usually 16 and 59 can apply for Income Protection cover. As the criteria for state provision of Employment and Support Allowance (ESA) becomes more stringent, it is key that individuals consider this type of cover to maintain their standard of living should long term illness or injury occur.
The likelihood of accident or illness varies depending on what occupation you do and premiums will vary to reflect this. For example, a roofer may pay a higher premium than an office clerk due to the higher risk nature of the job.
However, there are specialist providers who do not charge you more for having a higher risk occupation, though commonly the benefits are lower and/or would stop or be reduced when you are able to undertake any work, rather than being able to resume your original occupation. Always read the policy documents carefully to understand the terms of the policy.
There a number of things which can affect the premium you may pay these are such things as:
Age, health, occupation, deferment period, benefit required and indexation.
A deferred period could also be called a waiting period. It is the period of time that you need to be off work due to illness or accident before your Income Protection Policy begins to pay out.
Yes, providing that you lose it through no fault of your own. If you're fired for something you've done, or if you leave the job without another one lined up, your policy most likely won't pay out.
Yes you can. Because the policies are designed to help over different time periods and in different situations, you will be paying multiple premiums.
You won't get any money back if you never make a claim.
According to the ABI, one million workers a year find themselves unable to work due to a serious illness or injury. It doesn't matter whether or not you have children or other dependants – if illness would mean you are unable to pay your bills, you should consider income protection.
The plan will have no cash in value at any time, and will cease at the end of the term. If premiums are not maintained, then cover will lapse.
Payment Protection Insurance and Short Term Income Protection Insurance can provide a monthly income to help cover your regular outgoings if you can’t work due to an accident, illness/injury or, often as an optional extra, unemployment.
There are important differences between these products, and long-term Income Protection Insurance. They include a limit on how long the replacement income will be paid for – usually between 12 and 24 months. By contrast, Income Protection Insurance will pay out for as long as you are unable to work (up to the policy expiry).
Unemployment cover is often an optional extra on these policies, or can be purchased as standalone cover.
Income protection (with no investment link) has no cash in value at any time and will cease at the end of the term. If you stop paying premiums your cover may end.
Haven Protect Limited is a company registered in England & Wales no. 10216588. Registered Office at Earle House, Ground Floor, Atlantic Street, Altrincham, WA14 5DD. Haven Protect Limited is authorised and regulated by the Financial Conduct Authority no. 773416. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.
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