Be sure to use our handy checklist, designed to help you evaluate your own financial situation to ensure you find the policy that best meets your needs.
Find out whether you're covered under a group insurance policy. Many employers have this so that they can pay your salary if you're off long-term. It doesn't appear on your annual P11D statement of taxable benefits in kind, so you'll need to ask.
Don't over-insure. If you have two income protection policies, total payouts will be restricted. Some Income Protection policies also deduct state benefits from your payout.
Check to see whether you have an employee benefits package, and if you do, how long the benefit lasts. Consider how you will cope financially if you are still unable to return to work after this period ends.
See if you are entitled to government benefits. You may be entitled to less than you think, and this is where Income Protection can help.
Review your savings. While these may see you through some time, once they're gone, they're gone. If you can afford the premiums, you may be better off taking out income protection and keeping your savings for other eventualities.
Income protection may be of even greater value to you if you know you don't have an employer's sick pay benefit or sufficient savings to fall back on, and this is even more so the case if you are self-employed.
Above all, your premiums must be affordable, as while you are in receipt of your income protection payments, you may still need to keep on paying the premiums. Therefore, you need to set them at a level you can afford to balance your current budget against the peace of mind that having income protection cover provides.
Do your research, especially if you're a smoker. With most providers, smokers pay around 50% more than non-smokers. Some do not add an extra premium for this.
Be honest. Make sure you fully disclose all your health issues when applying for a policy. Insurers can turn down a claim if they find out about a health condition you didn't previously flag up, no matter how small it seems. So provide more information, it will avoid risking a rejected claim further down the line.
Confirm whether your premiums are guaranteed throughout the policy or reviewable over its course, and plan accordingly.
Avoid policies that cover 'activities of daily living' (ADL) or 'activities of daily working' (ADW), as these often don't pay out unless you're unable to do basic tasks such as dressing yourself or holding a pencil.
Cut the cost. If income protection looks too expensive for you, consider reducing the monthly payout, extending your deferred period or looking at a short-term policy.
Consider combining two low-cost policies - an income protection policy and a short term income protection policy. An income protection policy with a long deferral period is much cheaper than one with a short deferred period. During this time, the short-term policy can be used to bridge the gap.
Check for waiver of premium. Many income protection providers will pay your premiums while you're receiving payment under their policy.
Ensure you have regular reviews. Circumstances often change, and you may need to reassess your level of cover if your household income alters. Some policies include an indexation option, which ensures that your cover will keep pace with inflation.
Switch before you ditch. Don't cancel your current policy until the new one is in place. Terminating without waiting could leave you without cover over the transition period.
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Income Protection Insurance
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