Income Protection

If you are looking for an extra piece of mind when it comes to your finances, Income Protection insurance could be the one for you.

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We provide a free of charge consultation as part of helping find you the right income insurance supplier. Here at About Mortgages, we have no ties to specific providers so our team of leading experts have the freedom to partner you with the ideal insurance provider that answers your unique requirements. 

Our team will answer any questions of yours during a consultation, but first you can familiarise yourself with some of the most frequently asked questions we receive when it comes to acquiring income protection insurance. 

What is income protection?

Income protection insurance is a type of insurance policy that provides you with a replacement income if you're unable to work due to illness or injury. Unlike other types of insurance that pay out a lump sum, income protection pays you a monthly amount, typically a percentage of your previous income, until you're able to return to work or until the end of the protection period, whichever comes first.

How Much Does Income Protection Insurance Cost?

The cost of income protection insurance varies depending on several factors:

• Age: Generally, the younger you are when you take out the policy, the lower the premiums will be. This is because younger people are statistically less likely to make a claim.

• Occupation: The nature of your job can impact the cost of your premiums. If you work in a high-risk industry or have a job that is physically demanding, you may pay higher premiums.

• Health: Your current health and medical history will also influence the cost of your premiums. Insurers may ask you to undergo a medical examination or provide details of your medical history to assess your level of risk.

• Income: The amount of coverage you need, which is usually a percentage of your income, will affect the cost of your premiums. The higher the amount, the higher the premiums.

• Deferred Period: The waiting period is the amount of time you must wait before you start receiving the protection. A shorter waiting period typically results in higher premiums.

• Protection Period: This is the length of time you'll receive the financial protection if you're unable to work. The longer the protection period, the higher the premiums.

Why is Income Protection important?

Income protection insurance provides financial security when you need it most. Here are a few reasons why it's essential:

• Maintaining Your Lifestyle: If you're unable to work due to illness or injury, your income may stop, but your expenses won't. Income protection insurance ensures that you can continue to pay your bills such as your mortgage and maintain your lifestyle while you're unable to work.

• Peace of Mind: Knowing that you have a financial safety net in place can provide peace of mind for you and your loved ones. You won't have to worry about how you'll make ends meet if you're unable to work.

• Long-Term Financial Security: Income protection insurance can provide long-term financial security by replacing lost income for an extended period if you're unable to return to work.

Types of Income Protection Insurance

There are two main types of income protection insurance: short-term and long-term.

Short-Term Income Protection 

This type of insurance typically provides financial protection for a limited period, such as one or two years. It's designed to cover short-term disabilities or illnesses that prevent you from working for a relatively brief period.

Long-Term Income Protection

Long-term income protection insurance provides financial protection for a more extended period, often until retirement age if necessary. It is suitable for more serious injuries or illnesses that may require a more extended recovery period or result in a permanent disability.

Exclusions and Limitations from Income Protection

Like all insurance policies, income protection insurance has exclusions and limitations that you should be aware of before purchasing a policy. Common exclusions may include pre-existing medical conditions, self-inflicted injuries or disabilities resulting from illegal activities. It's essential to carefully review the terms and conditions of any policy to understand what is and isn't covered.

Things to consider

Some income protection policies offer additional features that you can add to your policy for extra protection. These may include:

• Indexation: This feature automatically increases your financial protection amount each year to keep pace with inflation, ensuring that your coverage remains adequate over time.

• Waiver of Premium: With this feature, your insurance premiums may be waived while you're receiving financial aid, helping to alleviate the financial burden of paying premiums while unable to work.

Is Income Protection taxable?

In the UK, the tax treatment of income protection insurance payments depends on whether the policy was paid for with pre-tax or post-tax income.

Paid with Pre-tax Income: If you paid the premiums for your income protection insurance using pre-tax income (e.g., through a workplace scheme), the financial protection you receive from the policy are generally treated as taxable income. This means that you'll need to pay income tax on any financial aid you receive, similar to how you would pay tax on your regular earnings.

Paid with Post-tax Income: If you paid for your income protection insurance using post-tax income (e.g., through a private policy), the payout you receive are usually tax-free. This means that you won't have to pay income tax on any financial support you receive from the policy.

It's essential to note that the tax treatment of income protection insurance can vary based on individual circumstances and any changes to tax laws. Therefore, it's always a good idea to consult with a tax advisor or financial professional for personalised advice regarding the tax implications of income protection insurance in your specific situation.
 

We can help tailor an income protection package to suit you

About Mortgages are here to help with your Income Protection queries, questions and applications. Our expert team is on hand to offer professional and tailored advice to ensure that you make the best decisions regarding your income protection. 

We are not tied to any specific provider so we can make sure that we help you to select the right income protection insurance. Call us for a free of charge consultation. There is no obligation to use our services and you can either meet in one of our offices in Horsham,  Southwater or Storrington. Alternatively, you can arrange a phone based appointment. 

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