Income Protection can provide financial support if you suffer an illness or accidental injury that prevents you from working. You select the amount of cover you require (within policy limits) and when you would like the policy to end, known as the termination age. Should the unfortunate happen, you could receive a monthly income to help towards your financial commitments. You will continue to receive these monthly payments until you recover and return to work, or until your chosen policy termination age, usually your intended retirement age.

Some employers offer a certain amount of sick pay. However, this may be insufficient for your needs, especially in the longer term.

Pros

• A wide range of accidental injuries and illnesses are covered.
• You can choose when you want the cover to end (known as your termination age). 
• It could provide long term security with regular payouts made until you recover, or you reach your chosen policy termination age.
• You can make as many eligible claims as necessary during the policy.
• You can decide how long to wait before you start to receive your monthly payments (the deferred period). So if you have existing sick pay arrangements and other insurance policies to provide you with an immediate income, you may be able to wait longer and therefore you could pay less for your premiums.

Cons

• Your payments may be reduced if you receive sick pay from your employer or business, or payments from other insurance policies, so it is important you take this into account when you set up your policy.
• The income you receive is normally only a percentage of your regular wage (generally up to 60% of your gross salary). However, as this is not taxable under current UK tax rules, this could amount to approximately 80% of your take home pay.
  
  

If you are employed or self-employed, Income Protection could offer peace of mind by providing monthly payments to help towards your outgoings should sickness or accidental injury prevent you from working.

If you want to research the market for yourself, look at insurance companies, banks, building societies and other financial companies. Speaking to a financial adviser will help you to find the right solution for you. You can also buy over the phone.

Think about it – Make sure you’ve thought carefully about what you want and taken into consideration any cover you already have or cover you are entitled to from your employer. You don’t want to be paying for more cover than you need.

Check the small print – Make sure you understand what is and isn’t covered as these can vary from company to company.

Consider all your options – Ask what’s available and make sure you understand all the extra options.

Shop around – Different companies offer different levels of cover at different prices. Make sure you shop around and that the cover you choose is the most appropriate for your needs and circumstances.

If unsure, get advice – If you’re unsure of what to do next, speak to a financial adviser who will be able to help you make the right choice.