Income protection plans provide regular income for a fixed period if you are unable to work due to an accident, illness or redundancy. 
 Research suggests that only around 10% of the working population has income protection insurance, of the remaining 90%, most have a misplaced and exaggerated notion of where an alternative income might come from.


 

We offer comprehensive advice on income protection insurance and as independent income protection advisers, we can search the whole insurance market to find the products that best meet your needs at the most competitive premiums.

Some people think their savings are adequate to tide them over any period spent without pay from work.  Average savings are currently at an all-time low and are unlikely to last for any significant duration.  Some employers might offer a reasonable sick-pay scheme for those temporarily incapacitated for work, but even these payments will be withdrawn if the absence is longer than three to six months and no pay at all will be available in the event of redundancy. 


Listed are a few examples and reasons for claims on income protection policies having been made; cancer, stress, depression, head injury following road traffic accident, chronic fatigue, multiple sclerosis, high blood pressure, heart disease, fractured leg, fractured arm, back pain.  It isn’t always easy to recognise when income protection may be needed, it will often depend on the kind of work you do and the effect an illness or injury may have on your work and your doctor’s opinion on your ability to work.

The amount you pay for an income protection policy will usually be influenced by the type of job that you do.  The higher the risk of injury or stress the more the premium will be.  There are usually 4 categories of classification.  Below is an example of a few job titles with their likely classification, please note that some insurers may categorise the same jobs differently.


  • Class 1 (lowest risk): managers, administrative staff, professionals, secretary, computer programmer
  • Class 2: engineer, shop assistant, florist, driving with mileage exceeding 20,000 miles per year
  • Class 3: plumber, teacher, care worker
  • Class 4 (highest risk): mechanic, bar worker, construction worker, roofer

There are generally two forms of income protection:

  • Accident, Sickness and Unemployment (ASU) – this is usually a policy which pays a benefit for a short period of time such and 1 or 2 years.  There is usually an exclusion period from inception and you can choose whether you want both accident and sickness as well as unemployment combined or whether you want accident and sickness only or unemployment only.  During a recession, it is often difficult to get unemployment cover unless you are changing your mortgage or taking out a new mortgage.

  • Permanent Health Insurance (PHI) – this is a policy that pays a benefit for a longer period of time, normally until the end of a selected term at outset or until you return to work or until you retire or die.  PHI is usually underwritten more strictly than life insurance because of the greater cost of being ill than of dying.  The different types of policy are far ranging and care needs to be taken that you understand the different benefits between policies and providers.  For example, some insurers will cover only 50% of the last 12 months earnings whereas others may cover 66%.  Changing job categories may cause a premium increase or, in certain instances, a decline of cover even where guaranteed premiums have been taken at outset.

Understanding the cover that you require and any cover you may already have is important.  Below is an example of typical permanent health insurance monthly costs for long-term income protection against accident, illness or disability based on Class 1.  

Benefit payment £500/mth – deferred 3 months – payable to age 65.


  • age 20:  -   £8.40 guaranteed rate       £7.00 reviewable rate

  • age 30:  -   £11.00 guaranteed rate     £7.00 reviewable rate

  • age 40:  -   £16.50 guaranteed rate     £9.24 reviewable rate

  • age 50:  -   £23.75 guaranteed rate     £16.00 reviewable rate

(Reviewable rates – no premium increase for smokers or occupation – premium increases with age)
(Guaranteed rates – premium dependent on occupation and smoker status)

The state provides statutory sick pay and employment and support allowance, but is this enough?  Have a think about how much your monthly outgoings come to and then see how much the state would give you.  You might find there is quite a shortfall.  How would you bridge the gap?



The state may help a little, this is what you may get each week:

  • Statutory sick pay from 1-28 weeks:  £79.15, or
  • Employment & support allowance 
(assessment phase) from 1-3 weeks:  £64.30, or
  • Employment & support allowance
 (main phase – work related activity group)
 from week 14:  £89.80, or
  • Employment & support allowance
 (main phase – support group) 
from week 14:  £95.15

Our Independent Financial Advisers are always happy to meet at our clients' preferred location and time and to have detailed initial discussions with no obligation.

Please contact us by calling 01949 836173 or email us on This email address is being protected from spambots. You need JavaScript enabled to view it.