Income Protection

Quite often you hear ‘it could never happen to me’ or ‘I’ll sort it out later’. Well the old maxim of “failing to plan is planning to fail” is no better suited to the ignoring of crucial decisions on protection.

Income protection (IP), previously known as ‘Permanent Health Insurance’ is an insurance policy created for people who become unable to work due to injury or illness. The insurance will pay out an income for said person suffering from illness or injury until retirement, death or return to work. It is possible to get either Long Term IP or Short Term IP.

Dependant on how much you were earning before you were unable to work, insurance policy’s usually pay out 50% to 70% of your earnings. Any payments you receive will be Tax Free.

This type of insurance is viewed as the ‘foundation’ of any financial planning you may make for your future, as it is likely any other plans will have to be given up if you do not have a sufficient income coming into your household.

According to research by Unum and Personnel Today, just 12% of employers support their staff for more than a year if they're off sick from work. Given the low level of state benefits available, everyone of working age should consider IP, but when we asked the public, just 9% said they have some form of IP, compared with 41% who have life insurance and 16% who have private medical insurance (PMI).