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Is Income Protection right for you?

What is income protection?

Income protection is designed to protect you financially if illness or injury leaves you unable to work and earn an income. Typically, an income protection policy can cover around 60-70% of your gross monthly salary. Then, should you become incapacitated, you could receive a replacement income until you sufficiently recover.

 

Figure out how much you need

Consider these key questions; How much of my salary will I need to cover? How much do I need each month to ensure my outgoings are covered? Will I need to cover up to 70% of my salary? It's essential to consider these questions to gauge what insurance to take out.

 

Choosing a deferral period

This is simply an agreement between you and the insurer. The longer you are prepared to wait, the cheaper your premium is. Some insurers fix their own deferral period, while others give you the freedom to choose your own.  

PG Mutual is an income protection provider that gives you a range of options when choosing your own deferral period – and it can be as little as one day for many occupations. That means you can start your claim pretty much as soon as you are signed off work. Please find out more about how our policies protect you.

 

What is covered?

Some insurers may refuse to cover any pre-existing illness or recurrent injuries you already live with. Others may refuse to cover certain illnesses full stop, whether you've already had them or not.

Do ask whether pre-existing illnesses are automatically excluded as you may choose to go through a medical assessment or questionnaire that could give you more coverage.



Understand exactly what your policy covers

Diving into the nuances of an insurance policy isn't the most thrilling way to spend your time. But if you want a policy that you can be confident in, it really is worth taking the time to learn precisely what a policy covers – and what it doesn't. Make sure you check the policy wording. It's a document that all insurers must provide and lays out the ins and outs of their cover. If you don't feel confident doing this, consider seeking independent financial advice and letting a qualified professional guide you.

 

How much does it cost?

That depends on many factors – including your age, your medical history, level of cover, and the perceived risk of your profession. Let's say you have diabetes; you're then more likely to have a higher premium as this condition, if not carefully managed, will more likely cause you to be ill and for longer than someone without diabetes. 

An example from PG Mutual:

Occupation: Postmaster - Administration; date of birth 1985; £2,000 income required per month; 3 months claim deferment period. Monthly cost: £22.56*


Income protection vs. critical illness cover

As you probably understand now, Income Protection is about providing a replacement income if illness or injury prevents you from working for a period of time.

Critical Illness cover doesn't focus on a person's capacity; instead, these plans provide a lump-sum payment or a series of payments to support you if you suffer a life-threatening or life-changing defined illness. This cover can be valuable in these circumstances but is not designed to replace future lost earnings.
 

Check past claims performance

The actual test of any insurance policy comes when you need to make a claim. And some insurers are better are handling claims than others. Between 2016 and 2020, PG Mutual covered 94% of all new claims.

 

Over to you…!

You can find out more about their cost-effective income protection policies at pgmutual.co.uk. If you have any questions about our cover – or income protection in general – we would be happy to help. Just give them a call.

*www.gov.uk/statutory-sick-pay/what-youll-get
*www.gov.uk/employment-support-allowance/what-youll-get  
**Discount included. Premiums increase with age.