Personal Insurance

Income protection is designed to pay out if you're unable to work due to sickness or accident. Long term income protection (formerly known as permanent health insurance) pays out until retirement, death or till your return to work, while short-term income protection (known as accident and sickness, unemployment and mortgage payment protection insurance) pays out for a set period, usually between one and five years.

Payouts are usually based on a percentage of your earnings: 50% to 70% is the norm, and payments are tax free. Income protection policies only pay out once a pre-agreed period has passed, generally ranging from one to 12 months after you put in a claim. Income protection doesn't usually pay out if you're made redundant, but will often provide 'back to work' help if you're off sick.

Key benefits

• It replaces part of your income if you can’t work because you become ill or disabled.
• It pays out until you can start working again, or until you retire, die or the end of the policy term - whichever is sooner.
• There’s a waiting period before the payments start. You generally set payments to start after your sick pay ends, or after any other insurance stops covering you. The longer you wait, the lower the monthly payments. For example, if your employer pays your salary for six months, then you'll need cover to start from the seventh month of sickness i.e. a six-month deferral period.
• It covers most illnesses that leave you unable to work, either in the short or long term (depending on the type of policy and its definition of incapacity).
• You can claim as many times as you need to, while the policy lasts.