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Income protection insurance offers income protection in the event of long term incapacity; it will pay you a monthly income if you are unable to work because of an accident, sickness or disability.
In the event of a claim, a permanent income protection policy will continue to pay out until you return to work or the policy expires, which will often coincide with the end of your mortgage term.
If you do return to work the income protection policy will stop paying out; however, with most policies of this kind, you are entitled to claim again in the event of further episodes.
When taking out a long term income protection policy you opt for a deferred period, which is the delay between becoming unable to work and receiving the benefit. Usually the deferred period would take into account any short term sickness pay provided by your current employer.
If you are self employed you will need to consider how long you could manage without a regular income. Note that the longer the deferred period, the cheaper the income protection policy will be.
Different insurers have varying criteria for defining whether or not you are unable to work, and it is therefore of paramount importance to make sure you are fully aware of the terms and conditions of each policy on offer, as well as the cost of the insurance. The income that income protection insurance will pay out is always limited to a proportion of your income, so that there is, at least in theory, an incentive for the policyholder to return to work.
However, as the benefit is tax free it often represents a substantial income. Pre-existing medical considerations will have a significant bearing on the cost of your premiums, as will your employment type: if you have a high risk occupation, insurers are likely to charge you more, because you are more likely to make a claim.
Insurers may also have 'exclusions', or situations where they will not pay out on an income protection insurance policy.
Contact us today for comparative quotes from top UK insurers and an explanation of how income protection insurance could benefit you.
As impartial brokers, we can offer you an online service, dealing with the top UK income protection insurance providers, to help find you the most competitive income protection quotes considering your situation and individual preferences.