Income Protection
Most UK employers only pay sick pay for 1 month and even those that pay longer often are on reduced terms. If your employer covers you under an employers group sickness scheme (Group IPI) your salary is continued but is subject to tax and NI in the usual way.
With an individual income protection plan you can replace up to 60% of your lost income (gross) and this benefit is NOT subject to tax.
Long-term income repayment policies usually come into play between the time when your employer stops paying sick pay, and when you collect your pension. They will continue to pay out until you are well enough to return to work or until the end of the plan.
Shorter-term policies or budget income protection are available. These usually only pay out for a limited period of 1 or 2 years but the cover comes at a reduced cost.
Income protection in many ways is a simple product as it does exactly what it professes to which is replace your income. Often they become confused with Accident Sickness and Unemployment Plans these sit in a different part of the market and offer a shorter term cover. Choosing the right Income Protection plan for your circumstances is crucial as lenders will offer different terms and additional benefits.
TERMINOLOGY
Decreasing Term
is where the amount you would receive in the event of a claim remains consistent for the period selected (in addition you may have the option to “index” the cover).
Level Term
can also be known as “Mortgage protection”. This is where the amount of cover you have opted for will decrease over a set period of time. Therefore it may used to cover a decreasing loan such as a mortgage.
Whole of Life
a life only plan that will pay out whenever you die (no upper age limit)
Indexing
It will be possible to index certain product which will try to protect the pay out value from inflation, although it may also lead to an increasing premium.
INCOME PROTECTION PLANS THAT HAVE NO INVESTMENT LINK, HAVE NO CASH IN VALUE AT ANY TIME
AND WILL CEASE AT THE END OF THE TERM.
IF YOU STOP PAYING YOUR PREMIUMS YOUR COVER MAY END.
When having a consultation with Wyke Financial we will consider your specific Protection needs and arrive to an agreed proposal that is both considerate of your circumstances and budget. We aim to outline for you the different areas of insurance cover we can provide and what cover they offer.
Other types of insurance such as buildings & contents or Landlords Insurance will be listed under GENERAL INSURANCE It would be worth your time having a read of the sub sections below so that you can decide prior to your appointment which type of cover is appropriate to you and your circumstances. Although we will of course advise you and recommend an appropriate protection product or package from our panel.
Did you know that the average UK household has savings to cover themselves for only 32 Days! (Source: Deadline to Breadline research, Legal & General 2017). Furthermore each year close to 1 Million people in the UK find themselves unable to work due to a serious illness or injury (Source: ABI 2015). So if you were unable to work due to illness or injury how would you cope financially?