Income Insurance

Income insurance is sometimes referred to as income protection insurance. As the name suggests, this product is focused around what you earn from work.

This type of policy is something that will pay out for those who are unable to work due to something like an injury or an illness (being made redundant is not usually covered by this type of policy). Typically these policies will pay out until retirement or return to work (or in a less cheery fashion, death).

So, with an income protection insurance policy, if you have an illness that prevents you from working you will still get some income from the policy if it pays out, and this would usually be in the range of 50-70% of what you earn. It is worth noting that there is usually an agreed period during which you can't claim, so it is only once this has passed that you will get paid out: the longer the period then the lower your premiums will be. This period is often in the region of one month up to a year.

Income protection is different to PPI which in contrast covers a particular debt, whereas income protection as just mentioned will cover a percentage of your income, tax-free.

There are various types of income protection insurance: these include something called ASU cover, which refers to accident, sickness and unemployment. More generally other policies can cover long-term and short-term income protection.

As for the cost of the policy, there are various factors that can affect this. They include things like the level of cover you want together with the particular job you do and factors such as your health.

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