Unexpected life changing events such as illness or accidents could mean you are unable to work and make your financial future less certain. In times of uncertainty, have peace of mind knowing your income is protected.

What is income protection insurance?

Income protection is a long-term insurance policy that is taken out to cover a potential loss of income when you are suddenly unable to work. The income protection insurance pays you a regular income until you return to work or retire, which ever happens first.

Typically, Income Protection Insurance is designed to cover most illnesses and injuries that prevent you from working, whether it's for a short or long period of time. It provides financial support to help you pay for expenses while you're unable to work.

However, it's important to note that Income Protection Insurance won't pay out if you're made redundant and it's essential to carefully review the terms and conditions of your policy to ensure that it covers the risks most relevant to your occupation and personal circumstances. It will also not replace the exact amount of money you earning before you stop work, usually covering up to about 60% of your gross income.  For very high earners the maximum proportion of earnings may be lower or tapered down. However, the payment is made free of tax so for many people it will approximate to their net income amount if maximising the cover.

Why get income protection insurance?

The main reason to take out income protection insurance is to have financial security knowing you can cover essential and key expenses such as mortgage costs along with essential expenditure if accident or illness prevents you from working.

Other reasons

  • Flexibility to choose short or long-term cover.
  • The payouts are tax free
  • You can make as many claims as required while the policy lasts
  • Some plans will pay proportionate or rehabilitation benefits for up to two years if you return work but in a lower paid occupation or the same one but in a reduced capacity.
  • You can choose level cover where the premiums and cover is fixed throughout the policy, or increasing cover where the benefits and premium increase but are not subject to further underwriting.

Things to consider

  • Pre-existing health conditions could increase your monthly premiums or result in a declined application, exclusion or limitation of benefit.
  • Ensure the policy covers the risks most relevant to your occupation and personal circumstances. Higher risk occupations or those using heavy equipment will clearly cost more to insure than sedentary office based jobs.
  • When you make a claim, it can take time from the claim date until the payments commence, for example these deferred periods are selected at outset and would normally be one, three, six or twelve months. A longer deferred period will cost less than a shorter one.
  • Potential exclusions on your policy that affect whether or not you receive your payouts.

Protect your income with Ascot Lloyd’s expert advisers

One of our financial advisers can help you navigate the complex world of income protection insurance. An adviser can conduct a thorough review of your financial circumstances to identify any potential risks to your earnings and find a policy that suits your individual needs. We put personalised plans in place to ensure your income is safeguarded in cases where you are left unable to earn a living as a result of sickness or accident. Additionally, an adviser can help you understand the terms and conditions of the policy, answer any questions you may have, and provide ongoing support throughout the financial planning process.

Access our income protection advice today

Take the complexity out of finding the correct protection policies and contact our team of experts to discuss your income protection options.

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Frequently asked questions

Does income protection insurance cover being let go?

No. If you decide to quit your job or dismissed from your employment, your income protection policy will not payout for this loss of income. Income protection cover is specific to income loss caused by illness or accidents.

Can I get income protection if I am self-employed?

If you’re self-employed or your employer does not offer statutory sick pay (SSP), income protection may be of value to you. If you’re suddenly unable to work, you can rely on income protection cover for regular payments.