Income Protection
Income Protection pays you an income if you become ill or injured and, as a result, are unable to work. You decide the amount of income, or Benefit, you wish the plan to pay and for how long it's paid for, the Term.
The Insurance Company set maximum limits to the benefits payable, typically between 55% and 80% of your earnings. This takes into account the tax and NI that you would pay on earnings. It also gives you an incentive to return to work as soon as you are well enough.
The monthly benefit doesn't usually kick in straight away; it starts after a preselected time period since onset of illness, the Deferred Period. The preferred deferred period is typically 3 or 6 months although you can select 1, 2, 3, 6 or 12 months.
If a claim is successful, the policy will pay the benefit until you return to work or, if you don't, until the end of the term.
If you don't claim on the policy you will get nothing back.
BUSINESS OWNERS – Executive Income Protection policies are available to Limited company business owners and can offer more favourable terms in certain circumstances. Executive Income Protection policies are paid as an off-settable expense through the business but insurance payouts are received by the business and must be treated in the same way as turnover to the business. They allow applications up to 80% of gross combined earnings (salary plus dividend and will take into account spouse’s income from the business provided that the spouse does not require an Income Protection policy).
