Income protection

What you need to know about income protection

Income protection does what it says on the tin – it can protect your income if you lose your job through redundancy or are unable to work through illness.

There’s two main types to choose from – straightforward income protection (IP) and accident, sickness and unemployment cover (ASU). The way they protect your income is different, as you’ll see below.

IP

Lets you protect a chunk of your monthly income (pay outs are usually based on a percentage of your earnings: 50% - 70% is the norm) if you fall ill or have an accident and can’t work for a while. You can do this until you retire if need be. IP policies don’t include redundancy cover though, and you might have to fill in a medical questionnaire beforehand.

ASU

Is more of a short-term solution. It’ll give you a set monthly amount to replace your salary for either 12 or 24 months, so you can pay your bills. Redundancy is covered with most ASUs too, but you might have to wait a bit longer for this part of the policy to kick-in (90 days is usually standard for this). 

You can have both types of policy running together for double protection.

Will these types of cover affect my employment sick pay?

No. Most employers will pay you sick pay for some period of time if you have to take a prolonged break. IP and ASU cover will usually start once this has stopped. If you’re self-employed, payments will start as soon as you’re signed off work.

If you’d like to talk to us about income protection, please complete the pop-up form on the right-hand side of this page. If you’d prefer to phone or get in touch by email, just use 01244 47010  or: info@moneytreewm.co.uk .