What is Income Protection?

  • Income Protection Insurance (IPP) otherwise known as Permanent Health Insurance (PHI) is designed to pay you a regular tax free monthly income if you are incapacitated and unable to work due to illness or injury.
  • The maximum amount of cover is based on a percentage of your gross earnings and is suitable for both employed and self-employed people.
  • There is no limit on the number of claims you can make and if you are never able to work again it will be paid until your selected retirement age (Max 65).

Is it worth having?

  • Anyone who does not get paid indefinitely by their employer when they are off sick from work should consider an IPP policy.
  • Most people would not be able to maintain their standard of living if they had to rely on benefits from Statutory Sick Pay and Incapacity Benefit, so IPP could form a key part of their financial protection needs.
  • The need for IPP is not merely limited to those people who are employed. For instance, self employed people off work due to illness or injury would only receive limited state benefits and would benefit from this type of policy.

How much does it cost?

  • The cost of IPP will depend on a wide range of factors including age, whether you are a smoker, occupation, level of benefit and deferred period.
  • As IFA’s we can research the market to provide you with the most suitable product. Please contact us.

What are Deferred Periods?

  • An IPP policy also uses deferred periods. This is the period of time that you need to be off work due to illness or accident before your Income Protection Policy begins to pay out.
  • This time period is selected by each individual and is normally dictated by the sickness benefits that your employer provides.
  • If you are Self Employed or receive no sickness benefits from your employer, then you will usually require a shorter deferment period.
  • Deferment periods can range between 1 day and anything up to 24 months dependent on an individual’s circumstances
  • It is important to bear in mind that the shorter the deferment period the higher the premiums will be.
Income protection plans that have no investment link have no cash in value at any time and will cease at the end of the term. If you stop paying your premiums your cover may end.
As IFA’s we can research the market to provide you with the most suitable product available.
The Financial Conduct Authority does not regulate Inheritance Tax Planning and Trusts.

Kate Beale

For more information on income protection contact Kate Beale on:

Tel: 01206 871120
Email: kate@bgafs.co.uk

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