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What Would You like to Know?

How do income protection plans work? How much cover can an income protection plan provide? How long will the cover provided by an income protection plan last? How long will I have to wait before my income protection plan starts to pay out? How much will an income protection plan cost? Am I paying too much for my existing income protection plans?

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How do income protection plans work?
Income protection plans are normally referred to as Permanent Health Insurance (PHI)

Permanent Health Insurance (PHI) is designed to provide a replacement tax free income if the unexpected happens and you succumb to long-term sickness or disability caused by illness or accident. Benefit levels of income protection plans are chosen with a view to maintaining your current standard of living and making repayments on outstanding loans or debts, including your mortgage.

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How much cover can an income protection plan provide?
The amount of benefit you can be covered for by an income protection plan is normally determined by your salary. Normally up to 65% of your current earnings can be replaced by an income protection policy, although any income from State benefits, pensions or other sources will often be taken in to account when benefit levels are calculated.

Cover can also be obtained if you are not working, and the amount available will vary from company to company.

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How long will the cover provided by an income protection plan last?
Most people set up their income protection policy to run until any age from 50 to 65. The cover is permanent, which means no matter how many times you claim on your income protection plan the cover will never be cancelled.

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How long will I have to wait before before my income protection plan starts to pay out?
When you take out an income protection policy you choose the length of time you will wait between becoming ill and benefits starting to pay, with a minimum normally of 1 month. This can be extended to 3 months, 6 months or 1 year. This is known as the "deferred period".

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How much will it cost?
Premiums on income protection plans vary depending on age, sex, occupation, tobacco consumption and amount of benefit required. The term and deferred period of the income protection plan will also cause variations in premiums.

A male non-smoker age 30, in an office based job, requiring £6000 per annum tax free benefit to age 60, deferred for 3 months could pay as little as £2.50 per week.* …

*Source: Common Trading Platform Jan. 2000

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Am I paying to much for my existing income protection plans?
Over the past few years, many protection policy premiums have reduced significantly.

If you have an existing life assurance, critical illness or income protection plan in force, use our FREE quote service, to establish if you can save money on your current policies. After all, why pay more than you need to! For more Information click HERE