How Does Income Protection Work?
Income protection pays a monthly tax-free income (typically 50-70% of your salary) if illness or injury stops you working. You pay monthly premiums and choose a 'deferred period' (waiting time) before payments start. Claims can last until you recover, return to work, or reach retirement age - unlike critical illness which pays once.
How Income Protection Works
Choose your cover
Select the monthly benefit amount (up to 70% of income) and policy term
Pay monthly premiums
Make regular payments to keep your policy active
Illness prevents work
If you can't work due to illness or injury, you start a claim
Receive monthly income
After the deferred period, receive tax-free monthly payments
Frequently Asked Questions
What triggers an income protection claim?
You can claim when illness or injury prevents you from working. This includes physical conditions, mental health issues, and injuries. You must be unable to perform your job (or any job, depending on policy definition).
How much does it pay?
Policies typically pay 50-70% of your gross income. The payment is tax-free, so this often approximates your normal take-home pay. Insurers cap it to maintain an incentive to return to work.
How long do payments last?
Long-term policies pay until you recover, return to work, or reach retirement age (usually 65-70). Short-term policies pay for a maximum of 1-2 years per claim.
What is a deferred period?
The deferred period is how long you must be unable to work before payments begin. Options range from 4 weeks to 12 months. Longer deferred periods mean lower premiums.
Related Questions
This page provides general information only and does not constitute personal financial advice. Income protection insurance products and their terms vary between providers. Always read the policy documentation carefully before purchasing. Your Home Finance is authorised and regulated by the Financial Conduct Authority.