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income protection insuranceIncome Protection FAQ’s

 

Below you can find the answers to questions you may have about Income Protection.

  1. What is Income Protection Insurance?
  2. How Long will Income Protection Insurance Pay in the event of Incapacity?
  3. How Much Income Protection Insurance do I Need?
  4. How much will Income Protection Insurance Cost me?
  5. Are there any Exclusions of Income Protection Policies
  6. What if I Become Unemployed or Decide to take a Career Break?
  7. What Happens if I go back to Work Following a Claim?
  8. How Many Times can I Claim on an Income Protection Insurance Policy?
  9. What is Hospitalisation Benefit?
  10. Can I Protect my Private Earnings or Self Employed Earnings?
  11. What Happens if my Income Changes?
  12. Can I Offset the Policy Against Inflation?
  13. What is the Difference between Income Protection Insurance and Locum Insurance?

Income Protection Insurance

  1. Q. What is Income Protection Insurance?

    A. Income Protection Insurance (aka PHI, Permanent Health Insurance, Income Insurance or Income Replacement), provides a tax free income until your selected retirement age (usually to between 50 and 70) if you are unable to work due to an illness or disability.



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  2. Q. How Long will Income Protection Insurance Pay in the event of Incapacity?

    A. In the event of claim, income protection policies can continue paying until your selected retirement age. For example a 20 year old male who took income protection insurance out until age 65 could claim on his policy for 45 years if required.



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  3. Q. How Much Income Protection Insurance do I Need?

    A. Most income protection companies in the UK offer a maximum of 50-65% of your annual salary, however based on current legislation you do not pay tax on these benefits. To assess how much cover you require, we recommend that you calculate how much money you require per month, i.e. mortgage payments, rent, bills, food, etc. and use this as a starting figure. Most people insure around 50% of their income, however some people only decide to cover mortgage payments. If you require any advice on this you can contact one of our experienced advisors by using the details on our Contact Us page.



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  4. Q. How much will Income Protection Insurance Cost me?

    A. The prices of income protection policies vary between companies. The premiums are calculated based on the level of cover you require, your current health, your occupation, your age, smoker status and the length of cover you require.



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  5. Are there any Exclusions of Income Protection Policies

    A. Most income protection companies do not cover normal pregnancies (although complications may be considered) and HIV/AIDS unless contracted accidentally in the course of certain occupations or from a blood transfusion. Some income protection companies will also not cover wilful self-inflicted injuries or claims arising from drug or alcohol abuse.

    Each income protection policy is underwritten individually based on your medical history, therefore if you have a pre-existing condition the insurance company may state that they will not cover you for any related injuries to that condition.

    For full details about these exclusions we recommend that you consult your key features documents before choosing your policy.



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  6. Q. What if I Become Unemployed or Decide to take a Career Break?

    A. Most companies offer a ‘career break’ or ‘non-working’ option for income protection insurance, which means that cover can be suspended for an agreed amount of time. Premiums and cover will therefore be suspended until you decide to re-commence the cover, usually this means that no further medical evidence will be required. Some companies offer to continue the cover at a reduced amount during this time in case you would require income for your family should you become ill during this time, to see if your policy includes this you should check your documentation.



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  7. Q. What Happens if I go back to Work Following a Claim?

    A. Your benefit will no longer be paid but cover can continue. If you return to work at a lower rat of pay then with most companies you can claim a proportional benefit to make up for the money you will lose.



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  8. Q. How Many Times can I Claim on an Income Protection Insurance Policy?

    A. You can claim as many times as needed and you can also claim more than once for the same injury/illness.



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  9. Q. What is Hospitalisation Benefit?

    A. Hospitalisation Benefit means that if you are confined to hospital for a number of days (specific details in key features documents) then you will be paid a benefit for each day you are kept there. This can be claimed on much earlier than your deferment period. Not all companies offer this benefit so if you are interested in it either contact us or consult your key features or policy documents.



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  10. Q. Can I Protect my Private Earnings or Self Employed Earnings?

    A. Income Protection Insurance is available for employed individuals, self-employed individuals, contract workers and housepersons.

    Employed workers base their benefit on their gross annual salary, this will need to proved in the event of a claim.

    Self employed workers will need to base a benefit on their pre-tax profits from their business after deduction of trade expenses. Upon event of a claim they would need to prove this income.

    We recommend that contract workers and housepersons check the key features of their chosen policy to ensure they are happy with the cover offered. It is also recommended that they speak to one of our qualified advisors before completing the cover.



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  11. Q. What Happens if my Income Changes?

    A. When your income or salary changes then speak to us about increasing or decreasing your cover.



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  12. Q. Can I Offset the Policy Against Inflation?

    A. Most companies offer an ‘Indexation Option’ or ‘Increasing Benefit Option’ which links the income protection insurance policy to either RPI, AEI or a set percentage each year. This costs slightly more and means that your premiums will increase along with the benefit.



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  13. Q. What is the Difference between Income Protection Insurance and Locum Insurance?

    A. It is important to understand the differences between Locum Insurance and Income Protection Insurance.

    Income Protection Insurance is a long term policy that covers for health related work absence. The policies will last until your desired retirement age and can be claimed on multiple times (even for the same illness/disability). For example a 25 year old who claims on an Income Protection Policy could receive a tax-free income for the next 25-45 years, depending on his selected retirement age and if he returned to work at a lower salary he could claim a proportional benefit.

    Locum Insurance is generally used to cover Practice expenses relating to employing temporary medical or administration staff during the the absence of a member of practice staff.



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