If you have any concerns about your potential financial situation in the event of being unable to work due to illness or injury, and would like to have a better understanding of what the government and/or your employer may provide you, why not try Percy The Protection Calculator?
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If you are interested in understanding more about how falling unexpectedly ill could affect your income, why don’t you follow Jo’s life journey below, and see how her income has been affected as her life circ*mstances changed.
How it works
There are different types of income protection insurance, but most are either Individual Income Protection Insurance (often called IP) and Employer Provided Income Protection Insurance (known as Group Income Protection or GIP).
- Individual Income Protection is taken out by a person seeking to independently protect their income in the event of being unable to work due to illness or injury. This insurance can be bought personally through an insurance broker or independent financial adviser (IFA), or in some cases, direct from an insurance provider.
- Employer Provided Income Protection Insurance is a policy taken out by your employer to protect your income if you are unable to work due to illness or injury.
If you or your employer buy an income protection policy, you will be paid a monthly income if you find yourself unable to work. You or your employer will pay a monthly premium to your insurer for your chosen policy which will pay out after a pre-agreed waiting period.
Most policies have a pre-agreed waiting period. This is also known as the ‘deferred’ period. The waiting period is the time between being unable to work and the time at which you will begin receiving payments.
Having an income protection policy will mean that you can continue to pay your bills, rent or mortgage if you are unable to work.
Individual income protection
You can apply for income protection if:
- You work in full time employment
- You work in part time employment
- You are self employed
You can also apply if you have a pre-existing medical condition, however depending on how serious your condition is, insurers may charge
you more, or they may apply a specific exclusion to your policy.
How to know if Individual Income Protection Insurance is for you? Here are some of the things you might want to consider:
- What would happen if you became ill and couldn’t afford to pay the bills?
- If you’re employed, do you have sick pay to fall back on and how long is this paid for?
- If you’re self-employed, what would you do if you couldn’t work for any reason?
- Do you have enough savings to cover any personal loan or debt repayments?
- Do you have any dependents, and will you have enough savings to cover you and your dependants if you are unable to work?
The cost of an Individual Income Protection Insurance product will be determined by the type of policy you want to buy, and your individual circ*mstances.
Factors that affect the amount you pay are:
- Type of job
- Your age
- The percentage of income you want covered
- Your health, including any pre-existing conditions
- When you want your policy to end
Employer provided income protection
Employer provided income protection, or Group Income Protection is insurance cover that employees can only get through their employer. This usually forms part of an employee benefits package.
Group Income Protection allows employers to choose a policy that fits their business needs and budget. Businesses can pick and choose how long a policy runs for, whether it’ll be fully-funded by the company or part-funded by the employee, what percentage of salary it pays out, which employees get it and how long they must be off work before the income benefit kicks in.
Key benefits of this type of protection insurance:
No medical underwriting, which means that individuals with pre-existing health conditions do not have to worry about exclusions related to their conditions and they are also able to receive additional support for these conditions.
Financial peace of mind at an uncertain time, as policies pay a regular income if you are unable to work
Access to dedicated support from your insurer though Employee Assistance Programmes and access to professionals such as mental health specialists and physiotherapists.
Expert case manager to assist employees to recover and return to work as soon as possible.
A specific focus on wellbeing with access to preventative support services and tools, helping to empower employees with maintaining their health and wellbeing.
It is advisable to talk to you employer about whether they provide this company benefit and to understand the support services available to you.
Income protection support services
While the financial benefits are usually the main reason why people choose to protect their income, income protection products frequently come with a wide range of added value support. This type of support - for both the employer and employee - usually comes as part of the policy and doesn’t cost anything extra.
Some of these support services can include:
Preventative measures
Many insurers provide specialist support services to policy holders, which enables employees of company schemes or individual policy holders to receive rapid access to assessment for a range of health issues including muscular problems and mental health conditions. Policy holders will often have a dedicated case manager assigned to them to take them through the whole process. This can include a tailored treatment plan and access to a wide range of specialists including psychologists, physiotherapist and other qualified professionals.
Accessing support services
Most insurers have dedicated Employee Assistance Programmes which provide access to support services 24 hours a day. These can offer support on a range of topics such as finances matter, relationships and legal issues, as well as dedicated mental health counsellors. These services can be accessed through dedicated helplines as well as through interactive online services..
Rehabilitation services
Rehabilitation services are at the heart of most protection insurance products. Many insurers offer access to rehabilitation teams who help manage an employee’s or individual policy holder's sickness absence. They often offer access to counselling and a wide range of other services, including assistance with HR issues and legal assistance. Many income protection policies have specific mental health pathways for people to get the tailored assistance they need.
