Income Protection – under the spotlight

What is an Income Protection policy and is it right for you?

An income protection policy provides a monthly payment to help replace a lost income through not being able to work because of an accident, illness and redundancy. The money can be used to help replace part of your wage/salary that would be used for bills, mortgages, rent. It can be a huge shock when being faced with financial hardship and an income protection policy will support with this.

So what do you need to know before setting up a policy?

Before setting up a policy you need to think about several things:

  1. How much money would you need to cover your outgoings? Being realistic that if you are out of work, the normal amount you need per month will change (for example your petrol costs will be reduced due to less commuting)
  2. What does your current employer offer in terms of sick pay?
  3. How much savings do you have and would you be willing to use in a time of need?


Who needs an income protection policy?

  • The simple answer is – anyone of a working age has a need for a policy, but the level and product type will differ due to individual circumstances.
  • Anyone worried about future employment prospects or is concerned about their industry.
  • Those with no savings to fall back on.


Things to understand:

There are two types of cover, short term and long term. In basic terms a short-term policy will only cover (pay you) for 12 months and has no medical underwriting which means your medical history does not need to be disclosed and provided to an insurer.

“Under the spotlight: there won’t be any cover for any pre-existing medical conditions, back or stress.”

A long-term policy will pay you up until retirement age, death or when you return to work (which ever comes earliest) after sickness or accident. A long-term policy is medially underwritten so you will need to be prepared to talk through your medical history with an insurer.

“Under the spotlight: a long-term policy won’t cover you for unemployment.”

How can I get the best value?

When looking at an income protection policy you need to get advice from a broker. The amount you pay monthly will vary depending on your medical history, how long you can wait before your first pay-out and how much cover you need as a percentage of your salary. On average you can only request cover up to 65% of your annual salary.

A broker will also be able to talk you through any in policy benefits. Some providers provide additional benefits such as online GP services, physiotherapy sessions and access to discount sites.

“Under the spotlight: pay close attention to any in policy benefits – you may need to use them in the long run and make your policy more valuable to you.”

Top tips

  • Talk to a qualified advisor for FREE – the A-Plan Life & Health team can help with this
  • Think about how much you can afford on a monthly basis – it must be sustainable and individual to you
  • Look at all the insurers available – many income protection insurers are not well-known brands but do have good reputations for customer service and claims satisfaction.


Talk to us to find out more: 0800 172 172

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