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What is income protection?

Income protection is an insurance policy that pays you a regular income if you’re unable to work because of injury or illness.

Sometimes life has a nasty surprise in store that can knock us sideways. If something happened to you that meant you couldn’t work, you’d need a plan of action to keep your finances happy.

If you’re lucky, your employer would provide you with sick pay. But not all do – and even if they do, it could be limited, so it’s worth checking your benefits. 

But what if you don’t have a generous boss? Perhaps you’re a homemaker or self-employed? Then income protection could make sense for you.

How does income protection work?

Income protection will pay you a percentage of your income if you can’t work because you’re ill or injured. 

Some policies can also provide specialist rehabilitation services that can be tailored to you – to help you get back on your feet and into work. Rehabilitation providers specialise in helping customers affected by certain claims, such as stress, anxiety, and depression, as well as musculoskeletal problems, including back pain and cancer. This means you can get the practical help and the treatment you need without delay.

Depending on the type of policy you have, a regular income may be paid for a fixed period or continue until you return to work or reach retirement age. Most income protection policies are quite flexible, with options that allow you to tailor a monthly premium to suit your needs – and your pocket.

While you’re not being paid by your employer, your protection insurance can make sure you receive a regular income to help you financially. 

Keep in mind – income protection policies don’t usually cover redundancy. So it’s important to have an emergency fund to fall back on in case you lose your income for other reasons. 

4 reasons to consider income protection insurance

1. It’s a safety net when you can’t work

The idea is to give you the financial cushion you need to cover your outgoings until you’re able to go back to work or until you retire. As income protection policies are based on your regular income, it doesn’t matter if you have 1 job or 3, have a fixed contract or are self-employed, you’d receive a fixed percentage of what you earn.

2. It protects the essentials

Sadly, the bills don’t stop just because your wages aren’t coming in. 

Income protection could enable you pay your monthly mortgage or rent payments, as well as utility bills and everyday items, such as food and toiletries.

3. It could help cover the fun stuff too

Just because you can’t work for a time, it shouldn’t mean you have to give up all the fun things in life. Having a monthly income coming in could help to pay for occasional meals out and day trips. After all, raising your joy is an important part of recovery.

4. It gives you that breathe-easy feeling

Income protection might seem a little strange at first. Like any insurance, it’s a thing you buy and yet you seemingly don’t get anything for your money unless you need to make a claim. But it earns its keep in another way by acting as a permanent comfort blanket. You can rest easier, knowing it’s there if you need it.

Help and support with choosing an insurance policy

We all know we need a financial plan to protect those we love. But how much cover is enough? And which policy to choose? 

To help you decide, you could talk to one of our financial advisers. Eligibility criteria apply. 

They’ll spend time getting to know your situation. Then they'll recommend a competitive policy that's right for you – from a carefully selected panel of providers.

You’re under no obligation to follow our recommendations – and you won’t pay a penny for receiving our protection advice.

If you decide to take out the recommended policy, you’ll pay for the cost of the policy, and we’ll receive a commission from the protection provider. You’ll find details about this in the policy’s key features document. But don’t worry, your adviser will discuss all this with you during a friendly, no-strings chat before you begin.

As with all insurance policies, terms and conditions, exclusions and limitations will apply.