Income Protection Insurance - Long term sickness and disabilty cover

Income protection insurance (IP)

If you want redundancy/ unemployment insurance with/ without accident and sickness cover then Accident Sickness Unemployment Insurance is found here.

Income protection insurance policies (also known as permanent health or PHI), provides a valuable insurance benefit paying a regular income when the policyholder is too sick to work.

Perhaps, foolishly, many believe that they will be able to rely entirely on the State to claim benefit in the event of illness or injury. According to DSS figures, out of the 900,000 who apply for State incapacity benefit 400,000 were turned down as they had not contributed enough to qualify for the benefit in the last two years. For those who do qualify for incapacity benefit the basic payments are shown below. Entitlement to benefit is set out according to time periods and is based on the short term or long term rate.

Incapacity Benefit - Summary of benefits available

Basic Rate

	First 28 weeks of sickness	£50.50
	From weeks 29 to 52	£60.20
	After one year	£67.50

Adult dependency increase

	First 28 weeks of sickness	£31.50
	From weeks 29 to 52	£31.50
	After one year	£40.40

Child dependency increase

	Eldest/ Only child	£9.85
	Each Subsequant child	£11.35

Age addition

	Before Age 35	£14.20
	After Age 35 but before age 45	£ 7.10
	After age 45	£NIL

Benefits of an income protection policy

Tax free income up to 50% of your gross salary

State Benefits (if any) can be paid in addition to the policy benefit

Benefits can be chosen until a specific age - right up to 65

Benefits are paid after a chosen deferred period: 4, 13, 16, 52 or 102 weeks

Cannot be taken away unless agreed with provider no matter if

Claims
Change of occupation (some exceptions apply)

Can include a Hospital Benefit paid irrespective of income during hospitalisation in deferred period.

Premiums cease on receipt of benefit.

Premiums Depend ON

Occupation

Sex

Ceasing Age

Length of deferred period chosen

Whether premiums are reviewable or guaranteed

Options include

Guaranteed (never to increase ) premiums

Reviewable (initially cheaper ) premiums

Level or increasing benefits (RPI or 5%) - usually require premium to change at the same rate

(Some Policies) - have a no claims bonus

Hospital Benefit paid during deferred period irrespective of other income

All quotations are provided on behalf of B. Portwood & Co Ltd by a local Independent Financial Advisor (NEIFS Ltd) so you can be sure that your interests are put first.