Do I need Income Protection?
Although you may be entitled to state benefits we are all aware that the process can be slow and arduous before your claim is not only accepted but processed as well. Do you have sufficient savings to manage your lifestyle whilst waiting for your claim to be processed and once the claim is in payment will it be sufficient to meet your needs?
What are the state benefits?
If you cannot work because you are sick or disabled, whether temporarily or permanently, you may be able to claim Statutory Sick Pay (SSP) or Employment and Support Allowance (ESA). Usually, SSP is paid for the first 28 weeks of sickness if you work for an employer. Otherwise, you should claim ESA. In some cases, you can get Income Support on top of SSP, depending on your circumstances and income.
SSP and ESA are intended to provide an income in place of your earnings when you cannot work. If you are able to do some work, you will not usually be able to claim these benefits. However, you may be able to do some work if your earnings are not more than a set limit.
Your employer pays Statutory Sick Pay (SSP) for the first 28 weeks that you are off sick. It is treated as earnings for the purposes of income tax and forms part of your taxable income. Statutory Sick Pay is paid at a fixed rate of £88.45 a week!
To get Statutory Sick Pay, you must be unable to work because you are sick or disabled. You must earn at least £112 a week. If you don’t earn this amount, or if you’re self-employed, you cannot get SSP. You should claim Employment and Support Allowance (ESA).
How does Income protection Work?
Income protection will not protect against redundancy, for that, you need unemployment cover and if this is a concern then please look at our other web pages covering this area. If you are unable to work through sickness or accident then a payment will be made to you dependent upon what is known as the deferred period and whether it is a long-term protection plan or a low-cost short-term plan.
Long term insurance policy:
This plan is dependent upon your occupation and health and is the most expensive in terms of monthly cost. Assuming this is the correct plan for you it can run up to your retirement age. The premium is then dependent upon the length of time between putting in a claim and payment, for instance, if you feel you can support yourself for eight weeks before putting in a claim then an eight-week deferred period may be right for you and will keep the monthly cost down.
Short-term income protection:
This version of the plan is cheaper than the one above. It can also cover you up until your retirement age but it will only pay out for a period of 2 years (24 months) for an illness or accident after which the plan will cease. It is worth noting that the time period in respect to one illness. If you were to be unfortunate enough to contract a second illness then the time clock reverts to 24 months again for the second illness.
Initial waiting periods: The monthly benefits are paid to you after a set period of time 4, 13, 26 or 52 weeks after which the benefit payments are made a month after this date.
Additional Benefits included in some plans
Of course circumstances can change and sometimes unplanned things can happen and we all need some additional help. With that in mind these are some of the benefits that are built into an income protection plan free of charge
Family carer benefit- Up to £1500 a month is payable to the plan holder to support you if you become the carer to your spouse, civil partner or child.
What Are The Costs?
The costs are relative to age, occupation and policy type. An income protection is tailored around your individual circumstances and needs there is a limit to the amount of cover you can put in place dependent upon your earnings. Why not get a quick quote here and we can give you a call to discuss your options further?