Income Protection

Income Protection

With the current demands on our disposable income, imagine what would happen if a wage earner faced being unable to earn an income if off work long-term, due to an illness, or injury. could they survive financially?

Many may feel that being off work long-term, and unable to earn an income is unlikely. However, there are over 2.8 million people in the UK, that are currently off work due to long-term sickness, equating to around 1 in 9 of those in full-time employment!*

If you found yourself in this position, you may initially benefit from financial support from your employer. However, that’s only likely to be there for a defined period. Plus, there’s limited state support to access, with Statutory Sick Pay at £116.75 a week.

Would that be enough to ensure you can continue to put food on the table and a roof over your head (via continued mortgage or rental payments)? And that’s just for starters.

a solution for you…

Whilst many will willingly insure their home, and sensibly take out life cover to help pay off the outstanding mortgage (as a minimum), far fewer apply the same principles to their own income stream. However, an option exists to help protect your income if a long-term illness or injury occurs, due to issues such as:
• Musculoskeletal (problems affecting your muscles, bones, tendons, ligaments, joints, cartilage & fractures)
• Cancer
• Mental health
• Heart-related

The product to help protect you should you suffer a long-term serious illness is Income Protection, which will generally cover up to around 60-65% of your gross income.

And, dependent on the type of plan you opt for, it could be a tax-free monthly payout until you’re well enough to return to work, retired or have died, whichever occurs first.

how is it costed?

The cost of the monthly premium is partly dependent on your age, health, whether you smoke, your occupation and if you’ve any hazardous or high-risk hobbies.
It’ll also take into account what you earn, and require as an income stream (if incapacitated), for how long, and the length of any deferment period, before payments kick in. The longer you opt to defer (before a successful claim payout), the lower the monthly premium could be.

short-term income protection

If you recognise the importance of having some degree of cover in place, but are concerned about minimising your outlay, then a shorter-term version is also available.

This option is designed to still deliver important financial support (if still off work) but for a more limited period of generally up to two years – even five, in some instances.

Broadly, for those that may be looking for £1,500 of monthly payments across a claim period of 2-years, then the monthly cost for a 30-year-old could be just over £10/month.*

and, it’s growing in popularity

Sales of individual Income Protection policies hit a record 247,000 last year, a 16% increase on 2022. With the Association of British Insurers saying that 97% of policies were taken up with advice given, reinforcing the important role advisers play in increasing consumers’ financial resilience.

As with all insurance policies, terms, conditions and exclusions will apply.

Don't miss a single thing...

Sign up to the Mortgage Brain news alerts and never miss a news story.  We will keep you updated every time we post a new article.

What our customers have to say...

Find a first time buyer mortgage deal

Get the right advice with one of our expert advisers...

Connect with one of our expert advisers.  Click below to book a 30 minute, no obligation, appointment.

Book appointment