There’s no play without work, a regular income protects what matters most, so isn’t it worth protecting?
Why do I need Income Protection?
Based on research carried out in 2015, the average household spends £1,422 on essential bills each month, this includes things like mortgage repayments, insurance policies, gas and electricity, mobile phones, house phones, broadband, pet insurance, TV license and TV provider bills.
Many people are under the impression that if unable to work the state will protect them. Did you know the maximum the government will pay per week in Statuary Sick Pay is £87.55 for only 28 weeks? Could you and your family survive on £350.20 a month?
How will £350.20 possibly stretch to the £1,422 of bills each month bearing in mind this figure doesn’t include any food or travel costs?
32% of households have no savings what-so-ever. This is a huge percentage of people living with no Plan B for when an illness or accident leading to unemployment should hit. By implementing just a small amount of Income Protection, you can rest assured knowing you have a plan B in place to cover your monthly expenditure if disaster should strike.
Income Protection works when you can’t. If you find yourself unable to work due to an accident or long term sickness, your Income Protection cover will begin to pay you a monthly income to replace your monthly salary.
Who is eligible for the Income Protection policy?
Whether you work in an office, are a steel erector or play football for Manchester United, FD Protect Insurance Brokers provide protection solutions for all types of job’s, trades and careers including the self-employed.
For example, we have covered sports professionals to provide an income due to an injury sustained whilst playing football. We have protected builders that needed cover to protect against an accident at work.
Just imagine if you couldn’t work for a period of time, how long would your savings last until you could no longer meet your credit commitments or sustain your lifestyle?
How can we help?
We will research and source the best provider for the level of cover you require in line with your budget for protection, assist you through the application process and we will liaise with the insurance provider to gain acceptance and in the event of a claim we will provide the necessary support to ease stress during this time.
Income Protection Options
Full Protection: This comprehensive policy is designed to cover your essential expenditure each month in the event of being unable to work due to accident or sickness. An Income Protection policy can be claimed on as many times as needed during the term of the policy. For example if you were unable to work due to an accident or sickness for longer than your chosen deferred period, your Income Protection policy will begin paying you a monthly income until you return to work. If you return to work for a period of time and then become unable to work again, your policy will once again begin paying you a monthly income after your selected deferred period. Your Income Protection will continue to pay you a monthly income until either you return to work or your policy expires.
Budget Income Protection: Budget Income Protection is a great alternative to full Income Protection if the budget you have set aside for protection doesn’t quite stretch for the full cover. You can still have the full monthly benefit, select a deferred period of your choice and chose a term however, there will be a limit on the period of time a claim will pay out for, and this will usually be 24 months but can vary depending on the provider. If you were unable to work due to accident or sickness for 3 months and then returned to work, you would still have 21 months to claim on should you be unable to work at any point during the term of your policy. You can claim as many times as needed up to a maximum of 24 months (if 24 months is the claim period).
Personal Sick Pay: At quotations stage Income Protection cover is costed based on your occupation. If your occupation is higher risk, this can make Income Protection cover expensive. An example of a high risk occupation would be fire fighter. Personal Sick Pay is an age costed product so it is a great product for those in high risk occupations looking for a way to protect monthly outgoings in the event of being unable to work due to accident or sickness. There is no claim period so you can claim as many times as you need to during the term of the policy in the same way you can for a Full Income Protection policy.
Budget Personal Sick Pay: Budget Personal Sick pay works in the same way as Budget Income Protection does for Full Income Protection. There will be a claim period (usually 24 months) in which you can receive income benefits for during the total contract of the policy over multiple claims.
Income Protection Deferred Period
The selected deferred period is the amount of time you have to be unable to work due to accident or sickness before you can begin receiving your monthly income benefit from your income protection insurance provider. The standard deferred periods are 3, 6, 12 and 24 months however there are specialist policies that will offer cover from as little as day 1 of being unable to work due to accident or sickness. The longer the deferred period the lower the monthly or annual premium will be. A deferred period should be selected in line with any employer benefits you will receive in the event of being unable to work due to accident or sickness, or the amount of time you will be able to maintain your monthly outgoings for before requiring the income benefit to pay you.
We will review you’re your circumstances and recommend a deferred period that will ensure that you receive your monthly income benefit when you need it in line with the budget you are able to commit towards this protection.
Typically, the premium of an insurance policy will be more expensive if you are a smoker. This is the case with standard Income Protection however, we have access to insurance providers who offer Income Protection products that do not take smoker status into account went costing so instead of reducing the amount of cover you are applying for, we can source a product that will allow smokers to have the level of cover needed in line with their budget. There are products for everyone and we know where to find them!
Own Occupation: If your Income Protection policy is set up on an ‘Own Occupation’ basis it means in the event of being unable to carry out your usual duties in your own occupation due to accident or sickness your Income Protection benefit will pay out.
Suited Occupation: If your Income Protection is set up on a ‘Suited Occupation’ basis it means in the event of being unable to carry out your usual duties in your occupation, you will also need to be unable to perform duties in any occupation that is suited to you as a result of your education, training or experience.
Standardly, Income Protection policies are set up using the ‘Own Occupation’ method to assess claim payments however, in line with some occupations or health history this may not be available to you. We have an extensive panel of insurers, direct contact with business development managers increasing the chances of being able to secure an ‘Own Occupation’ Income Protection policy for you.
Some Income Protection policies include additional benefits for no extra cost making your policy fully comprehensive. There are also additional benefits that can be included for an extra cost. Some of these include:
- Family Carer Benefit
- Hospital In-Patient Benefit
- Trauma Benefit
- Fracture Cover
- Discount on Other Protection Products
- Health Advise
- Counselling Services
- Legal Advise
Level of Cover
There are limits to the amount of cover you can apply for based on your salary. Each provider has different limits for example if your annual salary is £25,000 and the provider allows you to protect 55% of your income, you are able to have a monthly income benefit of £1,145.83.
Although Income Protection is a great policy to protect against loss of income due to an accident or sickness, it does not protect you against unemployment due to redundancy. There are products which protect against involuntary redundancy for the employed and for the self-employed it will provide protection if declared bankrupt, or if the business is insolvent or in liquidation. Unemployment cover is available alongside an accident and sickness policy and will protect mortgage repayments and general outgoings that enable you to maintain a general standard of living. Click here for more information on mortgage protection including ASU.
Like all insurance products there are options applicable to how the benefit amount acts throughout the term of the policy. For Income protection cover, we may recommend setting the policy up on an Increasing with RPI basis to help mitigate the effects of inflation. If you were to take out an Income Protection policy with £1,000 per month as the benefit, although this may cover your outgoings at present, a few years down the line £1,000 will not get you as far as it would currently. This is why we recommend your Income Protection policy increases each year.
Please call an income protection adviser to discuss your options on Bristol 0117 989 7951