So, what is income protection? Income protection insurance pays out an income if you’re unable to work because of illness or injury. Income protection insurance aims to put you back to the position you were in before you were unable to work. It pays a regular tax- free monthly income.
It does not, however, allow you to make a profit out of your misfortune. So the maximum amount of income you can replace through insurance is broadly the after-tax earnings you have lost less an adjustment for state benefits you can claim. This is usually translated into a maximum of 50% to 65% of your before-tax earnings.
There are general long-term income repayment policies designed to kick in between when your employer stops paying sick pay, and when you collect your pension. There are shorter-term policies to protect loans or other payments. These often start after a few weeks but tend to stop entirely after 12 months.
The small print
You need to have a very close look at the small print of any policy to make sure it will pay out when you want it to. Often the shorter-term policies have exclusions on areas such as stress related illness or back related illnesses. At Blue Moon, we ensure that any policy we recommend to our clients has been thoroughly explained and that any exclusions, or small print, are explained before you start any policy to ensure you know you are covered. We find that way is much better than you finding out at the point of claiming that you arent covered for whatever reason.
For a no obligation home and contents insurance quote simply give one of our advisers a call on 01933 303020. Or alternatively, please browse our site for more information on the various types of insurance we can provide. If what you want is not listed above, please call our friendly advisers who can guide you through the complicated world of Insurance.