09.06.23 08:32 AM Comment(s) By Weronika

In today’s world, where financial security is essential, it’s important to have a plan in place for unexpected events that may cause a loss of income.

Income protection insurance is an option that can provide financial protection in case of unexpected illnesses, injuries, or accidents. It is a policy which you can take out whether you are employed or self-employed. In this blog post, we will discuss what income protection insurance is, how it works, and why it is important to consider having it.

What is Income Protection Insurance?

Income protection insurance, also known as permanent health insurance, is a type of insurance policy that provides financial assistance if the policyholder is unable to work due to an illness, injury, or disability. It ensures that you still receive an income if because of a medical reason it makes it impossible for you to carry out your regular work. Income Protection does not typically pay out if you are made redundant from work, this is a different sort of insurance policy called ‘unemployment insurance’.

How Does it Work?

The income protection insurance policy pays a regular income replacement to the policyholder in the event of a succesful claim being made. The payment is usually a percentage of the policyholder’s income and is tax-free income. In most cases the payment continues until the policyholder is able to return to work or until the policy’s end date.

When taking out an income protection insurance policy, the policyholder selects the amount of cover they require, which is based on their income and their monthly expenses. The policyholder also chooses the waiting period before the benefit payments begin. The waiting period is usually between 14 and 90 days, and the longer the waiting period, the lower the premium will be.

Why is it Important?

Income protection insurance is essential because it provides financial security for you and your family in case of unexpected events. An injury or illness can happen to anyone, regardless of age or health status. If you rely on your income to pay for your monthly expenses, it can be challenging to keep up with bills if you’re unable to work due to an injury or illness. Income protection insurance can help alleviate the financial stress of these unexpected events.


Moreover, income protection insurance is particularly important if you are self-employed or don’t have access to sick leave benefits through your employer. It can also be important if you have a high debt load or dependents, as it can provide an extra layer of financial security.

Do I really need income protection insurance?

Before taking out income protection insurance it is important to ask yourself the following questions to check you are not duplicating insurance and to make sure there is a genuine need.

  • Do you already have income protection insurance provided through work? Some employees offer this as part of an employee benefit package, check with your HR department if you are unsure.

  • Do you have any other type of illness insurance policy which may cover you in the event of illness, such as critical illness protection which you took out with your mortgage. Just because you have Critical illness cover does not mean you don’t need Income Protection as they could cover you for different things.

  • Do you have savings you could use as an alternative to insurance? You should be confident that you are happy to rely on savings and have enough to cover a long period of sickness. You must also be sure that you could cover any other unexpected expenses if you are solely relying on savings.

Income Protection Terms

Income protection policies won’t cover every type of illness and terms vary from provider to provider. Personal pre-existing conditions are taken into account when a new policy is arranged. This means any medical problems which you, or a close family member has had in the past, maybe excluded from the policy. The insurer underwriters will ask for details of your medical history to determine any conditions that may be added to the policy.

You should also clarify the policy in terms of new job work as these will vary. This means asking if the policy will pay a claim if you are not able to continue to do your job, but you are able to carry out other sorts of work.

Working with an independent financial adviser, who fully understands the varying income protection policies is important. They will help match the right income protection policy and provider to your specific circumstances and needs. They will also guide you through the terms of an income protection policy and any individual exclusions so you fully understand the policy benefits and conditions before you sign.

The next steps

Income protection insurance is an essential consideration for anyone who relies on their income to pay for their monthly expenses. It provides financial security in case of unexpected events that can cause a loss of income due to illness or injury.





If premium payments are not maintained, the benefits of the plan will be put at risk. If premium payments cease altogether, the benefits of the plan will cease. The cover may be less than you need if you do not review it regularly.

Want to find out more?

To find out more, call and ask to speak to one of our Independent Financial Advisers at Furnley House on 0116 269 6311 or email us at

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