Benefits of income protection

Receive regular monthly payments

If you needed to take an extended period off work due to long-term sickness or injury, you may worry about how you’d keep up with your financial commitments.

Without income protection in place, you’d have to rely on sick pay (if you receive this benefit), dip into your savings and/or borrow from family/friends.

However, with income protection in place, you can rest assured that you can still receive a percentage of your income while you’re off work.

Up to 70% of your usual income could be paid out in monthly (tax-free) payments.

You’ll receive these payments until you’re ready to return to work, for the duration of your payment period or until you retire.

Payments aren’t tied to a specific financial commitment

With some policy types such as mortgage payment protection insurance (MPPI) or payment protection insurance (PPI), the payments you receive are used to cover a specific financial commitment.

For example, with mortgage payment protection insurance, the payments typically go straight to your mortgage lender to cover this key expense - meaning you can’t use the funds for anything else.

However, with income protection, the payments are paid directly you, so you have the freedom to spend them on whatever you see fit.

This could help you to cover:

• Mortgage or rent payments
• Household bills
• Daily living costs
• Debt or loan payments
• Leisure costs

Whatever your usual monthly wage would go towards, income protection could help to cover it.

Provide your own sick pay

Not all workers are entitled to sick pay benefits from an employer, such as the 4.24 million self-employed workers in the UK^[5].

While you may have access to ESA, would £84.80 (or £129.50 if you’re unable to return to work) per week be enough to help you cover your financial commitments and living costs?

By securing personal cover, you can be in charge of providing your own sick pay and you can choose the policy terms that best meet your needs.

This can provide you with peace of mind that you can still receive an income while you’re unable to work.

Alternatively, if you do receive sick pay, an income protection policy could help to ‘top up’ this benefit.

If you only receive statutory sick pay, you could use an income protection policy to provide an additional level of protection once your sick pay has come to an end.

Give yourself the recovery time you need

If you’re off work, and worrying about your finances, you may feel forced into going back to work before you’re truly ready as a way to minimise the loss of income.

But, with an income protection policy in place, your policy could pay out to you until you’ve made a full recovery.

In fact, when securing a long-term policy, you could still receive an income for the rest of your working life even if your incapacity meant you were unable to return to work.

Protection against a wide range of illnesses/injuries

Unlike other forms of cover, you don’t need to be diagnosed with a specific illness (which meets the insurers definition) to make a claim.

You can claim for any illness that prevents you from working so long as it meets the definition of incapacity listed in your policy.

Thankfully, most policies come with an ‘own occupation’ definition, which means you can claim for any condition which prevents you from doing your own job.