Income Protection Insurance - Protect Your Mortgage And Family
Income Protection Cover Insurance - How does it work?
Income protection insurance pays a regular income if you can't work because of sickness or disability and continues until you return to paid work, the term of the policy expires, or you retire. Income protection insurance is also known as permanent health insurance.
Income protection will pay you part of your monthly income. Typically, this form of illness protection cover will pay 60% of your gross salary.
You decide how much you need per month, and then you choose how long the ‘deferment’ period is (how long you could survive before it starts to pay). You can’t claim income protection payments straightaway, you usually have to wait a minimum period known as a ‘deferment’ period.
The longer the deferment period, the cheaper the cover. If you have 3 months full pay and 3 months half pay via work, you may wish to select £1,500 per month, to start after 6 months. Compared to the same amount of cover but paying after 4 weeks, the 6 month option is likely to be significantly cheaper.
The pay-out from an income protection policy is tax-free and can help you protect your monthly bills while you recover. The money can cover anything, like bills, mortgage repayments, rent and childcare costs. Because you don’t pay tax on your monthly payments, it should replace most of your salary, and continue to support the life you live.
No mortgage? No problem. Even if you don’t have a mortgage, income protection is likely to be highly beneficial if you rent, or even own a house outright, after all, we all have monthly bills and other credit commitments.
Income Protection Insurance For Self Employed
As those who are self employed don’t have anything in the way of employer benefits, income protection is often seen as the perfect solution. Unlike a critical illness cover that will only pay once diagnosed with a specific condition, income protection can pay for any reason as long as you are signed off by a doctor and deemed unfit to work.
As such, self employed individuals could have the cover take effect after 1 or 4 weeks of not being able to work, meaning they are protected a lot sooner and will receive a pay out a lot quicker, when compared to critical illness covers.
Needing to know more?
Our expert Mortgage and Protection Advisors offer fee free advice for all protection advice. Whether looking for the cheapest life insurance, or wanting to find an illness package to protect your family and lifestyle. Call one of our team based in Newcastle Upon Tyne, for mortgage protection advice.