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• Premiums as low as £3.50 per £100 of monthly cover
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• Back-to-day-one cover
  Tax free benefits are paid from the first day of your claim. Click here to find out more.
  
  
• Unemployment only cover, disability only cover, or both combined
  
  
• No premium loading on the basis of age, gender or occupation.

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Income protection plans – The facts

An income protection plan pays a regular income, usually monthly, when an insured person is unable to work after a certain period (the deferred or waiting period) because of accident, illness or redundancy.

The maximum benefit under most income protection plans is usually 50% of normal monthly income payable for normally 12 months.

An income protection plan may be protection only with-profits or unit-linked with profit and unit-linked income protection plan may offer a cash value on surrender or retirement.

Group or employee income protection plans pay the employer rather than the employee. The employer is subject to tax on the income protection plan benefit, but where the payment is passed onto the employee the employee pay income tax in the usual way and the employer gets tax relief on the salary paid.

Most income protection plan providers limit the maximum income protection plan benefit to a percentage of gross pay and many but not all deduct some or all state benefits in determining the amount that they will pay out. Over plan will not benefit the client at all as the income protection plan provider will only pay out up to its maximum benefit limits.

Income protection plans are increasingly essential for most people because of the low and taxable state benefits and the tougher tests to asses both disability and actively seeking work.
Notwithstanding this, recent research by the Fabian Society has revealed the following startling facts about income protection plans:

1. One in four employees believe that they would receive a full year’s salary from their employer if they were to become ill (most companies only pay up to three months)
   
   
2. Two out of three workers do not know how much state benefits would pay.
   
   
3. Four out of five workers worry about their income.
   
   
4. Two out of three workers have no income protection plan.
   
   
5. 60% of workers believed it to be very important to take out their own income protection plan.
   
   
6. When told the facts of State benefits 72% of all workers believed that it was less than enough to live on.
   

This research indicates the need for income protection plan and the fact that many people are unaware of the financial effects of becoming disabled or losing their job and that it is up to them to do something about protecting themselves against such an event by purchasing an income protection plan.

FACT: Only one in five people have planned for the financial consequences of long-term illness or unemployment. Research by HSBC found that half of all families admit that finances would be tight if the main breadwinner were to be unable to work, whilst 30% were not prepared at all for such an event.