Income Protection plan is a policy that pays out if the policy holder is unable to work due to injury or illness. It usually pays out until retirement, death or they return to work. Short Income Protection plans are also available at a lower cost to help individuals get back to work if they are sick.
There is only a minority of employers who support their staff for more than a year if they’re off sick from work which is why it is recommended everyone of a working age should consider an Income Protection plan.
The cost of an income protection plan depends on an individual’s health, whether they smoke and the type of job they are in. Many Insurers group their jobs into four categories of risk, for example: Class 1, Professional: managers, admin staff, secretary Class 2, workers with high business mileage: skilled manual work, engineer, florist. Class 3 Skilled manual workers: Care Worker, plumber, teachers. Class 4 heavy manual workers: bar person, construction worker, mechanic.
Income Protection usually pays out 50%-70% of earnings tax free. It is only paid out once a pre-agreed period has passed, generally ranging from 1-12 months after a claim. The longer the period, the lower the premiums. The default period is usually 13-26 weeks.