Income Protection
Protect Your Income and Secure Your Future with Income Protection Insurance
Income protection in the UK is a type of insurance that provides financial support if you’re unable to work due to illness or injury. It helps replace a portion of your income, ensuring you can still manage your essential living costs, such as mortgage payments, bills, and day-to-day expenses. The policy typically pays out a monthly benefit until you’re able to return to work or reach retirement, depending on the cover. This offers peace of mind, knowing that even if you’re unable to work for a long period, you have a safety net in place to help maintain your lifestyle and protect your financial stability.
Why Income Protection is Essential for Contractors
Income protection is particularly important for contractors in the UK because, unlike traditional employees, contractors often don’t have the same safety nets, such as sick pay or long-term financial support from an employer. If you’re unable to work due to illness or injury, income protection can provide a regular income to help cover essential expenses, like mortgage payments and everyday bills.
Without this protection, many contractors would find it difficult to maintain their lifestyle or meet financial commitments if they suddenly lost their income. Income protection ensures you have the financial support you need during difficult times, allowing you to focus on your recovery without worrying about your finances. Whether you have a family to support or are simply covering your own costs, it’s a sensible safeguard to consider.
If you’re unsure, consulting an adviser can help you find the right coverage to fit your unique situation as a contractor.
How Much Does Income Protection Cost?
The cost of income protection varies based on several factors, including:Age
- Your salary
- Your occupation
- Pre-existing conditions
- Level of cover
- Deferment period
- Pay out term
How Much Does Income Protection Cost?
The cost of income protection varies based on several factors, including:Age
- Your salary
- Your occupation
- Pre-existing conditions
- Level of cover
- Deferment period
- Pay out term
How much cover do I need?
Use our calculator below to estimate how much life insurance coverage you may need. Simply input your financial details, and let the tool calculate a recommended coverage amount to help protect your family’s future.
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Please note, these calculators provide only an estimate. For a precise evaluation, connect with our experts today!
How Contractor Mortgage Solutions Can Support You
We’ve been helping families secure their homes by finding the best income protection.
Here’s why you can trust us:
Expert Guidance:
As an independent intermediary, we offer honest advice, excellent customer service, and ongoing support tailored to your needs.
Financial Production:
We help our customers secure the best income protection cover from the most trusted and reputable companies.
Tailored Plan:
We can help customise your income protection cover to fit your family’s needs and financial situation.
Ongoing Support:
As your life changes, we’re here to help you adjust your policy. If your circumstances change, we’ll guide you in switching to a plan that suits you better.
How Does Income Protection Cover Work?
When setting up income protection insurance, there are five key decisions you’ll need to make:
Cover Amount
This is the monthly benefit you’ll receive if you’re unable to work. Typically, you can insure up to 60% of your gross income, allowing you to choose an amount that best suits your needs.
Cover Duration
You’ll need to decide how long you want your cover to last. Many people opt for the policy to last until retirement, or you can choose a specific number of years, such as 25 years, or however long you expect to be working.
Benefit Payment Term
This refers to how long the policy will pay out once you’re unable to work. Some people prefer payments to continue until retirement, but others may choose shorter periods, such as two or five years.
Deferred Period
This is the waiting time before the income protection payments begin. If you receive sick pay from an employer, you may not need immediate payouts, allowing you to opt for a longer deferred period. However, if you’re self-employed, a shorter deferred period might be more suitable since you won’t have an employer to rely on for support.
Definition of Incapacity
This determines when you can start claiming your benefit. Most policies use the ‘own occupation’ definition, meaning you qualify for payments if you’re unable to perform your current job due to illness or injury. There are also stricter definitions, like ‘any occupation’, where you must be unable to do not only your job but any job to qualify.
Income protection is a valuable coverage for many people, but it can seem complex. Our friendly advisers are here to guide you through these choices and help you find the right cover for your situation.
Policy Cover
What Does My Policy Cover?
- Illness: If your GP signs you off work due to illness, your income protection policy kicks in after the deferred period ends. This could be for a range of health issues, from anxiety or depression to more serious conditions like a stroke or heart attack. Income protection covers any illness that prevents you from working.
- Accident/Injury: Whether it’s a car accident, a sports injury, or simply hurting your back, your policy will start to provide support once the deferment period has passed, as long as your GP confirms you are unable to work due to the injury.
What Isn’t Covered?
- Death: Income protection doesn’t provide a payout in the event of death. For this, you would need a separate life insurance policy.
- Redundancy: Income protection only covers health-related absences from work, not redundancy. If you’re worried about redundancy, consider looking into mortgage protection insurance, which can include this type of cover. Speaking to a financial adviser can help you find the right policy.
- Dismissal: Like redundancy, being dismissed from your job is not covered under income protection insurance.
Income Protection For Self-Employed
Yes, you can! Income protection is particularly important for self-employed individuals, including contractors, freelancers, business owners, or those on zero-hours contracts. When you work for yourself, you may not have the same safety net that traditional employees do, so protecting your income becomes even more crucial.
Whether it’s an injury, illness, or mental health issue, being self-employed means you rely heavily on your own abilities. If you were unable to work for weeks or even months, how would you cope financially? That’s why it’s essential to consider income protection as a safeguard for your future.
FAQ’S
What is the ‘own occupation’ definition in income protection?
‘Own occupation’ means you can make a claim if you’re unable to do your current job due to illness or injury. This is usually the most comprehensive form of cover, as it focuses on your specific profession rather than your ability to do any job at all.
Does income protection cover mental health issues?
Yes, most policies will cover mental health conditions, such as anxiety and depression, as long as these prevent you from working and are certified by your GP. Make sure to check the specific terms of your policy for details.
Can I have more than one income protection policy?
While you can technically have multiple policies, insurers generally won’t allow you to be overinsured. This means you can’t receive more than a certain percentage of your income from claims, so it’s best to ensure your cover is adequate with a single policy.
What happens if I return to work part-time?
Some policies offer a ‘proportionate benefit’, meaning you may still receive partial payments if you’re able to return to work part-time, but at a reduced income. This can help ease your transition back to full-time work.