Income Protection

Income protection provides financial security if you are unable to work due to accident, sickness or injury. It provides a monthly tax-free lump sum to help you maintain your standard of living and meet your regular financial obligations. Life is unpredictable but planning ahead can make all the difference for you and your loved ones.

When we’re unable to work due to illness or an accident, you might assume that your employer will continue to give you some level of income. However, employees are usually moved onto Statutory Sick Pay within six months.

Very few employers support their staff for more than a year if they’re off sick from work. Check what your employer will provide for you if you’re off sick.

Depending on the level of savings you have, the loss of an income can soon leave you unable to pay essential household bills, such as mortgage/rent and utilities.

It can be particularly difficult if you’re self-employed and so have no sick pay to fall back on.

Income protection recommendations are tailored to your specific level of income and sick pay arrangements so that they pay a monthly benefit aligned to your individual circumstances. We will only ever recommend policies that cover 'own occupation' as these are the gold standard that protect you against the exact realities of your professional life. The deferred period (how quickly the monthly benefit is paid to you) is something we look to dovetail with your sick pay arrangements and/or savings you are happy to use. You will receive your monthly benefit once your deferred period is over (paid 1 month in arrears) until you return to work or your policy finishes (typically set to your retirement age). 

In short, no it won't. Most insurers cover around 60% of your gross annual income, depending on earnings. Whilst this means that it won't usually match your normal level of take-home pay, this is also an incentive to return to work.

That all depends on your needs and circumstances. For most people, they look to cover their income in full to receive the maximum monthly benefit. Others are happy to cover a set amount e.g. essential bills and costs of running the home. Remember that an income protection policy will not pay as much as your normal take-home pay otherwise there is no incentive to return to work.

That all depends on how much cover you need. Cost is dictated by your age, smoker status, occupation, health status, deferred period, how much cover you need and how long you need it for.

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Once your cover starts, you will need to pay by monthly direct debit to keep the policy active.

We only recommend policies that have guaranteed premiums. This means that the monthly cost is the same through the whole policy term.

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If you have a policy where the cover amount increases with inflation, then your premiums will also increase due to inflation but not due to any claims or changes to your health.​

A non-weighted premium is where the broker does not add any additional margin to the insurer’s price beyond the commission already paid by the provider. This means you are paying the insurer’s standard premium, with no extra uplift applied.

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At V Finances, we only use non-weighted premiums, as this ensures the best possible outcome for our clients. By not applying any additional charges, we can offer the same level of cover, with the same insurer and policy term, at a lower monthly cost than brokers who use weighted pricing.

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By contrast, a weighted premium includes an additional margin set by the broker, increasing the overall cost of the policy without enhancing the level of cover.

A deferred period dictates how soon until the policy starts to pay your monthly benefit. The shorter the deferred period, typically the more expensive your monthly premium.

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Typical deferred periods available are: 2 weeks, 1 month, 2 months, 3 months, 6 months, 12 months and 24 months.

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If you have a job where you get 3 months' full sick pay then 3 months' sick pay at 50%, then some insurers offer dual-deferred periods, so you get a smaller monthly benefit after 3 months (when your sick pay decreases) which is then topped up to the full monthly benefit once your sick pay stops. This can help to keep premiums down.

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Some occupations are riskier than others and the insurer may insist of a minimum deferred period of 3 months even when this doesn't match your sick pay.

Every occupation will be given an 'occupation class' by insurers based on their perceived level of risk and the likelihood of a claim. So someone working in an office may be occupation class 1 (least risky) whereas someone working at height on a roof may be occupation class 5 (most risky). So if all other things were the same (age, smoker status, health status, smoker status, amount of cover and length cover required), you would expect the person working at height to have higher premiums than the person working behind a desk.

This all depends on what those pre-existing conditions are, whether you are awaiting investigations or surgery, whether you are fully recovered or on medication.

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Sometimes, pre-existing conditions are excluded from your cover meaning that should you be off work due to a pre-existing condition then the policy would not pay out. However, should you be unable to work due to a different illness or injury then you may still be covered.

Some insurers offer policies that will pay out a monthly benefit for 1 year, 2 years or 5 years at a time before you have to go to back to work for 6 months before you can make another claim. Because they are only paying out for a limited period, this can make your premiums cheaper.

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The risk with these policies is that if you were seriously ill and unable to return to work, then you need to think about how you would manage once your limited payment period has finished.

An age-banded or age-costed policy is one where the premiums increase every time you pass a birthday. So although in the early years the premiums are generally low, they can sometimes make cover prohibitively expensive as time goes by which means you may have to cancel your cover when you are more likely to need it as you get older and your risk of illness increases.

You will need to answer a medical questionnaire as the insurer needs to know what risk they are insuring and whether they can offer you terms. We will offer you the choice of going through the medical questionnaire with us or some insurers will let us send you a link to fill it out yourself.

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If you have any pre-existing conditions, it is worth having information to hand before applying for cover as the insurer may need to know dates of diagnosis/treatment, names of medication etc. You should also know your current height and weight.

We have over a quarter of a century of experience in giving tailored advice specific to your circumstances.

We have established relationships with insurers and can check any pre-existing conditions in advance of an application to ensure we find the best fit for you.

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We will look after all of the process from start to finish and keep you updated every step of the way.

We are regulated and authorised by the Financial Conduct Authority, so you get the same protection as if you were going direct to an insurer but with the added bonus that we search for the best deal across the insurers we use.