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Income Protection

Offering peace of mind if you’re unable to work:

A monthly income if you can’t work due to sickness or injury
Allows you and your family to maintain your standard of living
Our industry knowledge will ensure you get the best price
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Income Protection

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What is Income Protection?

Income Protection is the safety net that provides a replacement income if you are unable to work due to an accident or sickness.

We all rely on the income we earn to support our family, pay our bills or just do the things that make us happy. Many of us, therefore, don’t like to consider the idea that something might cause our income to suddenly stop. How would we deal with such a traumatic impact upon on our lives?

Although it is scary to imagine, planning ahead and investing in Income Protection can lessen your fears and provide reassurance if you ever need to take time off work.

How much Income Protection do I need?

We often hear feedback from our clients that they have previously been advised ‘you should cover for 50% of your monthly income as that’s what the average is’ which, frankly, is terrible and unfounded advice.

The truth is that no two people are the same, and protection reviews need to be tailored towards the individual asking for advice and not given ‘the industry average’.

If you are considering income protection, you need to discuss your financial situation with an adviser and consider your monthly requirements for:

  • Debts
  • Mortgage/Rent
  • Living expenditure
  • Childcare
  • Any other monthly commitments

If you’re off work due to an accident or sickness, you need to focus on your recovery, not worry about your financial commitments.

When completing a fact find with your broker, have your bank statements to hand so you don’t forget anything. Nothing is worse than paying monthly for your insurance just to find you have a shortfall when it comes to a claim.

If you’re currently employed, speak with your employer about your remuneration package BEFORE deciding how much cover you need!

Some companies will provide Income Protection as part of their employee benefits package. Make sure you don’t have anything in place as you don’t want to be paying unnecessarily for cover you already have.

The same thing applies when it comes to disclosing existing insurances you have in place. If you have Life Insurance cover, you may be able to negotiate a discount by placing both with the same provider.

Income Protection

How much does Income Protection cost?

Income Protection pricing is calculated depending on the individual applying for the policy and the options they choose.

Insurers will consider several factors when deciding the premium which includes (but is not limited to):

Age: The older you are, the higher chance you have of catching a serious illness. Insurers will take this into account, and you will find that premiums get more expensive as you get older.

Medical history: Any pre-existing medical conditions and family medical history can have a significant impact, because medical-based loadings can be quite high for certain conditions.

Occupation: What you do for work will have one of the biggest impacts on your premium. If you are in a high-risk role (such as steelworkers and roofers) you have more of a chance of having a serious accident and needing to claim than if you were in a low-risk role (such as office and retail workers).

Policy set up: When arranging the insurance, you have the option to choose how long until the policy starts paying, how much of your income you want to cover and for how long. The more benefit for you and the longer the policy pays for, the more you will pay in premiums.

These are just some of the things you need to consider when arranging a policy as additional factors and upcoming lifestyle changes will impact your premium.

If you are looking to get the best price possible, it is always best to discuss your options with a specialist broker as they won’t charge you a fee. The reason that they can do this for free is that they receive a commission directly from the insurer.

Having access to the whole of the market when reviewing a Sick Pay Insurance policy instead of just one provider is also a huge benefit to clients.

Income Protection Cover

Will insurers pay my claim?

Insurance, in general, has gained a bad reputation over the years due to payment protection scandals and historic mis-selling by old school advisers.

Fortunately, times have changed and firms that sell insurance are now heavily regulated to prevent any mis-selling and ensure that customers are correctly advised.

Statistics from the Association of British Insurers show that insurers have paid out 87.2% of all claims submitted in 2019, with the average value of claims being £17,728:

Due to terms and conditions, the average Income Protection claim figures are lower than other products in the Protection industry, so advisors at Hooray Health & Protection will always consider an insurer’s claims approval rate very carefully.

We will never recommend an insurer whose paid claim percentage is below 85%, so you can be secure in the knowledge that your money will be protected in the long run.

Long term sickness insurance

Which terms and conditions should I look out for?

Unless one of our clients has a hazardous occupation and we are struggling with cover, we never recommend any incapacity definition other than ‘own occupation’.

If we stop with the insurance jargon and break down the definitions for what they mean to our clients, they are as follows:

Own Occupation: If you need to claim, the plan will pay out if you are unable to continue working in your current job capacity i.e. your ‘own occupation’.

Suited Occupation: If you need to claim, the insurer will undertake an assessment in which they review your work experience, skills and any education. Once completed, the insurer may state that you can return to work in a different role for which ‘you are suited’.

Activities of daily living: A historic definition, and not a good one in our books. Here, an insurer will assess your ability to undertake tasks such as showering, getting changed, using the toilet, walking etc. If you can’t do a set number of these it might pay out, but if you are able to do any then it can be declined. Insurers sometimes use this to argue you are fit for certain jobs, even after suffering a serious accident or sickness. For that reason, we never recommend agreeing to activities of daily living clauses.

Sick Pay Insurance

Why use Hooray Health and Protection for Income Protection Insurance?

Income Protection is a complex product with a few different factors that need to be considered by a protection expert before you take out your policy.

If you are, or previously were, a smoker, then this is going to impact your premiums and certain insurers will price more favourably than others. The same applies to pre-existing medical conditions, as different insurers will take a different view on conditions than others.

Considerations like these are best weighed up by a professional, to make sure your cover is perfectly suited to you.

Going direct to an insurer or via a broker who doesn’t know what they are doing could end up costing you more in the long run.

Here at Hooray Health and Protection, we understand the industry and everything that comes with its intricacies. We also won’t charge you anything for a review as we are paid by the insurers.

So, for a free review of a new or existing policy, reach out to one of our friendly advisors using the chat function below, or call us on 01273 222805.

Frequently Asked Questions about Income Protection

How long does the insurance last?

Short-term plans will generally only cover periods of 1-2 years, whereas long-term policies can provide protection all the way until you reach retirement.

Are short-term policies worth it?

Short-term protection can prove useful for individuals who can’t afford long-term policies, but those who can are better off pursuing more comprehensive plans, as the value they provide is much more significant.

How does it differ from Group Income Protection?

The difference between individual and Group Income Protection is that group policies are taken out by businesses to cover multiple staff members and individual policies are taken out by a single person, to cover only themselves.

Is Income Protection tax deductible?

All income protection payments are completely exempt from tax in the UK, as long as the policies are being paid for by an individual, as opposed to a business.

Who are the most popular providers?

There are a staggering number of different Income Protection providers in the UK, with some of the biggest among them including AIG, Aviva, Legal & General, LV and Nationwide.

Help & Support

If you have any questions, please call us on 01273 222805 or email [email protected]

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