Income Protection

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Income protection provides a replacement income if you are unable to work as a result of an accident or illness.

We like to call it the peoples insurance as it’s the foundation to protecting you and your family and you do not need to die or have a defined illness to benefit from it.

It does not matter what your debts are, whether it’s your mortgage, rent, a loan or credit cards. The benefits provided under this policy will keep the wolves away from your door to allow you the time to recover from your accident or illness.

Below are links to answers to the questions most people ask we hope you find them useful.

Income protection provides a replacement income if you are unable to work as a result of an accident or illness.

We like to call it the peoples insurance as it’s the foundation to protecting you and your family and you do not need to die or have a defined illness to benefit from it.

It does not matter what your debts are, whether it’s your mortgage, rent, a loan or credit cards. The benefits provided under this policy will keep the wolves away from your door to allow you the time to recover from your accident or illness.

Think about your income and how much you earn and what it pays for – now imagine, could you do all that on £94.25 statutory sick pay for 28 weeks?

Most of us have a limited amount of savings or none.

Your ability go to work and earn an income is probably your most valuable asset.

It’s that income that maintains your ability to pay for the mortgage or rent, put food on the table and pay for the other things we need and want.

Income protection is designed to help us keep those things as much as possible.

As such is probably the most useful protection policy because, most of us will not die or get a critical illness before we retire, but are more likely to be off work as a result of an accident or illness.

The monthly amount agreed will not change unless an increase in premiums and benefits is agreed at the outset.

Benefits are payable until you return to work, you reach state retirement or the policy end date whichever is first.

Other options are available depending on the insurer where the benefits can be paid for periods of one, two or five years.

The reduced benefit payment period policies are lower cost options designed for people that want the protection but find the policies designed to cover you throughout your working life until retirement too expensive.

It’s better to have something rather than nothing.

When you take out a policy you will have the option of varying deferred periods (the time you need to be off as a result of an accident or illness before you receive benefits), these are commonly from 1 week, 1 month, 3 months, 6 months, 1 year and 2 years.

Some policies can have a deferred period of one month but when you have qualified and been unable to work for that month the policy will cover you from the start of your illness or injury.

Since the Covid – 19 pandemic most companies are not providing benefits on new policies with deferred periods less than 1 month.

The length of the deferred period effects the price as the shorter the deferred period the higher the risk to the insurer.

Due to some employees receiving full pay for a period of time and then receiving half pay for an additional period of time there are stepped product where you can have a deferred period for 6 months and then receive partial payment whilst on half pay which will increase to the full amount of benefit when your employee benefit stops.

If you die you will receive no benefits.

Some occupations will not be able to get income protection.

Some lifestyle choices or hobbies you do in your spare time may not be insurable. Motorcycle racing for example.

When you take out the cover you will be asked to complete a medical questionnaire, if you have any pre-existing conditions they will not be covered.

Some policies come with a moratorium which means that existing condition from the past 5 years from the start of the policy could be included should you be symptom free for two years.

You should speak to an adviser to discuss the options available and which application method is available and most suitable to you.

The adviser will base his recommendations based on an assessment of your needs.

When applying for this type of policy the following are considered which affect the price.

OCCUPATION – Your job is a major determining factor in the cost. Most companies divide occupations into 4 general classifications. Some occupations will be classified as uninsurable and you may not be able to get income protection.

AGE – The younger you are when you start this type of policy the lower the cost.

SMOKING STATUS – Smokers are more likely to suffer from a range of illnesses, if you Vape you will be classified as a smoker.

MEDICAL HISTORY – You will be expected to answer personal medical questions upon application, but your family medical history will also be taken into consideration.

LIFESTYLE – These are your hobbies the activities you do in your spare time. Certain activities like riding a motorcycle will increase your premium with some companies and others will not insure you at all.

AMOUNT OF BENEFIT – This should not come as a surprise the higher the income you have to protect the more expensive it will cost to protect it.

LENGTH OF POLICY TERM – The same is true regarding the length of time a claim will be paid. Policies can pay from one year, two years, 5 years and up until retirement.

Premiums are the payments you make for your policy when you take it out.

Some policies are age banded, so at a younger age the cost of your beneits will cost less. Every time you increase from one age band to another the price will increase. These are lower to start but can be very expensive the older you get and become cost prohibitive at a time when you may need it most.

Guarenteed premium policies are more expensive at the outset but over the term of a policy to retirement, the overall cost of your policy will generally cost less.

Annual increases can be set up at the start of a policy in line with the RPI (Retail Price Index) which will help guard the policy against deflation. The premium will increase and so will the benefits provided by the policy.

Although this can help keep the policy in line with yearly pay rises if your pay rises don’t happen every year you could end up paying for increased benefits you will not qualify for in the event of a claim.

It is advisable to have yearly review meetings with your financial advisor to assess how your benefits are aligning with your current income.

You should discuss this with an advisor to see which option best suits your needs.

Some income protection policies come with a waiver of premium automatically include which means as soon as the claim starts the policy pays for itself and you do not need to make any payments to maintain the policy in force.

Others provide you with the option to add a waiver of premium which will cost extra.

No, if you do not become ill or suffer an accident resulting in a claim you will not receive anything from the policy.

If you cancel the policy you will not get any money.

Yes, due to the complex nature and the differences between insurers it would be advisable to seek professional advice.

You 1st Mortgages provide fee free protection reviews, and we would like to hear from you.

If you receive advice from You 1st Mortgages, our advisers subscribe to and abide by a number of laws and regulations that exist for your protection, confidentiality and security.

These include;

 

  • The Financial Conduct Authority (FCA) – We will tell you if any product or service recommended is not regulated by the FCA.
  • The Financial services Compensation Scheme – for your financial security.
  • The Data Protection Act (DPA) – to protect your confidentiality.
  • The Financial Ombudsman Service – an independent and impartial body to help resolve complaints between financial businesses and their customers.
  • Financial crime – we support the Proceeds of Crime Act and all efforts to eliminate money laundering.
  • Other interests – To avoid doubt we will tell you if any conflict of interest exists.

 

 

 

 

 

If you have any questions regarding any of the products you find information about on this site please feel free to contact You 1st Mortgages and we will do everything we can to assist you.

INCOME PROTECTION (WITH NO INVESTMENT LINK) HAS NO CASH IN VALUE AT ANY TIME AND WILL CEASE AT THE END OF THE TERM. IF YOU STOP PAYING PREMIUMS YOUR COVER MAY END.

We will stand by our advice, we will stand by you. We will put You 1st.st

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