Income Protection

How valuable is your income?

Could you maintain your lifestyle if you were unable to earn?

What is Income Protection?

Income Protection is a type of insurance that provides financial support if you're unable to work due to illness or injury. It ensures that you continue to receive a portion of your income until you can return to work, reach retirement age, or until the policy term ends.

This cover helps with essential living expenses such as mortgage payments, bills, and daily costs, offering peace of mind during health-related work absences.

Income Protection can be a crucial safety net, particularly for those without substantial savings or alternative sources of income.

Who is it Designed For?

Income protection is particularly beneficial for a range of individuals, including:

Self-employed individuals: Without employer-provided sick leave, this cover ensures financial support if illness or injury prevents them from working.

Primary breadwinners: Those whose families rely on their income can maintain financial stability during periods of inability to work.

People with mortgages or significant financial commitments: Ensures that essential payments, like mortgages or rent, are covered if income is lost.

Individuals without substantial savings: Provides a financial safety net for those who lack savings to rely on during a period of illness or injury.

Employees without comprehensive sick pay: Offers income replacement when employer-provided sick leave is insufficient or unavailable.

Professionals with Specialised Skills: Individuals in specialised fields where recovery may take longer, delaying their return to work.

Income Protection provides a vital safety net, ensuring that individuals can maintain their standard of living and meet financial commitments even when unexpected health issues arise. By replacing a portion of lost income, this type of insurance offers peace of mind, helping cover essential expenses such as mortgage payments, bills, and day-to-day costs during periods of illness or injury.

How Does Income Protection Work?

Income Protection provides regular payments that replace a portion of your income if you’re unable to work due to illness or injury.

Here’s how it works:

Payment Duration: It pays out until you can return to work, reach the policy benefit limit, retire, pass away, or the policy term ends—whichever occurs first

Payout Amount: Typically, it replaces between 50% and 65% of your income while you’re unable to work.

Coverage Scope: It covers most illnesses that prevent you from working, whether in the short or long term.

Multiple Claims: You can claim as many times as needed while the policy is in force.

Waiting Period: There is often a pre-agreed waiting (or ‘deferred’) period before payments begin, commonly set at 4, 13, 26 weeks, or one year. The longer the waiting period, the lower the monthly premiums.

Difference from Critical Illness Insurance: Income Protection is not the same as Critical Illness Insurance, which pays out a one-off lump sum if you are diagnosed with a specific serious illness.

This safety net helps ensure you can maintain your financial commitments during challenging times.

How Much does Income Protection Cost?

The monthly premium for Income Protection varies based on your policyBullet list choices and personal circumstances. Here are the key factors influencing the cost:

Product Factors

Monthly Benefits: The amount you want to receive as a monthly payout in case of a claim.

Benefit Duration: Whether you want the payout limited to a maximum of 12, 24, 60 months, or for the entire term of the policy.

Term Length: The overall length of the policy.

Deferred Period: The waiting period before benefits start, commonly set at 4, 8, 13, 26, or 52 weeks. A longer waiting period usually results in lower premiums.

Age-Costed vs. Non-Aged Costed: With an age-costed policy, premiums will increase yearly as you age, reflecting higher risk, whereas a non-aged costed plan, will initially have higher cost, but premiums remain fixed throughout the policy's duration, which may be more cost-effective in the long run.

Reviewable vs. Guaranteed Premiums: With reviewable premiums, the insurers may adjust premiums periodically based on risk assessments, whereas with guaranteed premiums, initial cost will possibly be higher, but will be fixed for the entire policy duration.

Personal Factors

Your Age: Older individuals typically face higher premiums.

Smoker Status: Premiums differ significantly for smokers, non-smokers, and ex-smokers.

Body Mass Index (BMI): Height and weight can affect premiums, with higher BMI potentially leading to increased costs.

Existing Medical Conditions: Any current health issues can impact pricing.

Family Medical History: A history of certain conditions may influence your premium.

Occupation: Jobs considered higher risk can lead to increased premiums.

By understanding these factors, you can make informed decisions about your Income Protection policy and its costs.