Income protection pays you a monthly sum if you're unable to work due to injury or illness. This can be used to cover your everyday expenses and is designed to offset the financial impact of loss of income.
A deferral period is the duration between the time you make a claim and when you receive your first payment. This can be as short as 2 weeks to as long as 52.
Income protection payouts are usually based on a percentage of your earnings: between 50% and 70% is the norm.
Premiums can be kept low by opting to go commission-free, extending your deferral period and by choosing a short term rather than a long term income protection policy.
No, the income protection instalments paid to you are tax-free.
The level of cover you require should be based on your own financial situation and income. It is important to factor in any benefits you may receive, either from the government or from your employer as well as any saving you may have.
While providers typically pay out at a 90%+ rate, some policies have exclusions built-in to their key facts documentation, so it's important to read the terms and conditions carefully to know exactly what you're covered for.
For those who are self-employed, having income protection can be of even more importance. This is primarily because you won't have any employer's sick benefits to fall back on, but also as illness or injury may in fact place your entire livelihood on hold.
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Income Protection Insurance
Protect your income in the event of illness or injury with cover at 0% commission rates
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