This replaces your income if you can’t work due to sickness or injury. It ensures you continue to receive a regular income until you retire or until you can return to work. Income protection is not the same as critical illness insurance. Critical Illness cover pays out a lump sum if you have a serious illness, whereas Income Protection pays you a weekly or monthly tax free amount to replace loss of income.
Depending on the insurer, it is possible to cover up to 70% of your gross salary and this amount paid to you would be free from income tax.
Income Protection policy helps you pay your bills. It helps you maintain your standard of living while you’re unable to work due to sickness, illness or injury for a short or long term.
It is usually based on a percentage of your earnings and it also pays out until retirement, death or until you return to work. Short term Income Protection policies are also available at a lower cost which can protect your income for a short time such as one to four years.
Only a few employers support their staff for more than a year if they’re off sick from work so every working adult in the UK should consider getting Income Protection.
If you do not have savings or provisions, you and your family will certainly struggle financially. The reason to take Income Protection is to cover your bare necessities such as, food, clothing, shelter and other expenses.
If you become unable to work, having this kind of protection can give you peace of mind and will cover your monthly costs in the event of loss of income.