Income Protection

Often called “Permanent Health Insurance”. Unlike Life insurance this type of protection pays the benefits to the life assured. Designed to provide an income in the event of the life assured being unable to work due to sickness or disability. At the application stage the applicant would chose a deferred period (1, 3, 6 months) that would need to pass before income payments became payable.

The longer a person can financially cope before needing income payments the lower the premiums will be. Payments would usually be paid until return to work or retirement. It may be prudent to set the policy up so that payments increase in line with inflation or increases in average earnings.

There are many variants regarding the circumstances under which benefits are and are not payable, so it’s essential that professional advice is sought on this matter to ensure the correct policy is set up.

Subject to budget, its worth considering combining an amount of Critical Illness Protection (see Critical Illness section of this site) with Income Protection, this would, in the case of serious illness or disability, allow the costs of specialised equipment or home alterations to be met.