You can get the support right up to retirement age
Income protection can guarantee you an income if you are unable to work(Image: Getty)
Employees have been encouraged to look at a scheme that could deliver thousands of pounds monthly. Income protection is a lesser-known insurance type where recipients receive approximately 60 per cent of their gross wage if they cannot work or experience loss of earnings.
Payments can be made over a timeframe of two or five years, or across an extended period, potentially stretching right through to retirement age. Specialists at income protection provider The Exeter said the product could suit many different types of workers.
The organisation said: “Anyone who is earning an income from employment or self-employment should consider income protection to provide a safety net in the event of ill health or injury. We all need to consider how we would meet our financial commitments if our income reduced or stopped due to ill health.”
Payments up to £10,000
Income protection is typically arranged for an individual by means of a financial advisor – this is how The Exeter arranges its policies. People aged between 18 and 59 can get the support, and the coverage can continue until age 70, with payments up to £10,000 a month.
Most people choose to begin receiving income protection payments once their employer sick pay ceases. The present Statutory Sick Pay (SSP) stands at merely £118.75 weekly if you cannot work, and this ends after 28 weeks.
Most people start to claim income protection once their statutory sick pay concludes, as the longer you delay, the more affordable your premium becomes. When a financial adviser organises your income protection, they will conduct a market assessment and then lodge an application on your behalf with the insurer.
However, some employers may provide group income protection schemes to staff members, so it’s worthwhile checking what assistance your workplace offers. The team at Exeter warned that there is a general lack of awareness of the product.
The group said: “Income protection isn’t a compulsory form of insurance in the same way that car insurance is and doesn’t insure a material possession or investment such as buildings and content insurance, so there isn’t a clear and immediate ‘need’ from a consumer perspective. There’s also a lack of understanding around what is available to protect against the financial impact of illness or injury.
“If less people are in a position to receive financial advice, for example those who are renting rather than buying a house, the likelihood of them researching products on their own is slim.” One person who is benefiting from their income protection with The Exeter is Harvey, an events business proprietor in his 50s who had to cease working due to multiple sclerosis.
‘I can’t imagine my life without it’
His policy will support him until the age of 60 and as he is unable to return to employment due to his medical condition, The Exeter has removed the restriction on his benefit, so he receives more money. Harvey said: “I really can’t imagine what my life would be like without income protection.
“It would be very, very difficult and much harder for my wife as she’d have to make a lot more money. This protection was very helpful when I did stop work.
“I did a lot of looking after the kids because I could still stagger about. So, it was really, really nice. It enabled us to maintain a very good quality of life.”