Income protection insurance

Our Living Costs Protection, which is a form of income protection insurance, can help replace some of your earnings if you're unable to work due to illness or injury. This could help you pay essential bills like your mortgage, rent and other outgoings such as utilities and food, enabling you to focus on your recovery.

Payments are made monthly as a fixed amount and start after a deferred period (a waiting period) which lasts between 4 and 26 weeks, depending on the option you choose. 

You can claim as many times as you need while the policy lasts. But you'll need to return to work for at least 16 hours a week for at least six months in a row before you can make another claim.

How much do you get each month?

You'll get between £500 and £1,500 a month, subject to eligibility, tax-free, on each successful claim, for up to 12 months.

When deciding how much you'd like to get each month, consider the effects of inflation. Since prices tend to rise over time, you'll want to make sure your money will help you fend off future shocks.

How long does the policy last?

You can choose a policy lasting anywhere from 5 to 52 years, or until you're 71. You'll pay fixed monthly premiums for the duration of your policy.

What's a deferred period?

The deferred period is the waiting time between the first day you're unable to work and the first day you’re eligible for income protection payments. You can choose a deferred period of 4, 8, 13 or 26 consecutive weeks when you buy your policy. 

Generally, the longer the deferred period, the cheaper your premium, but the longer you'll have to wait until your first payment. So, it’s important to ask how long you could manage financially if your income stopped or dropped.

Do you need income protection insurance?

You might need income protection insurance if a loss of earnings due to illness or injury would make it tough for you to pay the bills.

Consider how you’d cover your usual monthly costs if you were ill or injured and couldn’t work for a while. Could you still make ends meet using statutory (employer) sick pay, your own savings or state benefits? It's worth mentioning the current statutory sick pay is £116.75 per week. It's usually paid by your employer for up to 28 weeks only. If you're self-employed you're not eligible for this benefit. Income protection therefore might be a powerful way to guard against financial hardship.