What is income protection awareness week?
The Income Protection Task Force has announced that this year income protection awareness week will take place from 17th – 21st October. The awareness week is a dedicated week in October that aims to promote the importance of income protection insurance.
If you couldn’t work because of an illness or injury, would you be able to keep up with daily living costs for you and your family? In this article, we will help you to understand income protection better and decide whether or not income protection is right for you.
Why do you need Income Protection?
If you are too ill to work you can get up to £99.35 per week Statutory Sick Pay (SSP) for up to 28 weeks from the government, however for most people, this will not be enough to cover all of their living expenses.
This is where income protection comes in. Replacing up to 70% of your gross income, it will most likely cover you for longer than statutory or any employer sick pay you may be entitled to. This would help cover any mortgage or rent payments, household bills, childcare costs as well as any other ongoing living expenses.
Having income protection in place also prevents you from having to use up any savings you may have or take on debts. People without income protection who are off work for a pro-longed period may have to rely on someone else for income, or significantly change their lifestyle if they find themselves unable to work because of their health.
How much does income protection insurance cost?
The amount you pay depends on the percentage of your monthly income you want to cover, and the period you choose to wait before you begin to receive payments (this is called a Waiting Period). At Shepherds Friendly, our Income Protection starts from just £5 a month. You can cover up to 70% of your gross income and you can choose a Waiting Period from just 4 weeks, all the way up to 52 weeks.
Are income protection payments taxed?
No, income protection payments are not taxed. Instead, payments cover 70% of your regular gross income and is not subject to national insurance. If you’re self-employed income protection payments can cover up to 70% of your net profit.
What are income protection benefits?
While the core benefit of income protection is replacing up to 70% of your gross income, providers may offer additional benefits. Shepherds Friendly have partnered with Nuffield Health to provide members with an Enhanced Benefits package in addition to their Income Protection plan. These benefits include 24/7 medical advice from a virtual GP, an emotional wellbeing app to support your ongoing mental health and 20% off a Nuffield gym membership.
Shepherds Friendly also have Family Support Benefits which include a £250 New Child Payment for member’s children born or adopted during the time the plan is held, and in the unfortunate event a member passes away during the plan, a £6000 Bereavement Payment will be paid to the family of the deceased.
Does income protection cover redundancy?
No, income protection does not cover redundancy or dismissal. As it only covers loss of income due to health reasons or being incapacitated. Furthermore, income protection does not cover any time off work due to unemployment or resignation.
When to claim income protection?
You should claim for income protection as soon as you fall ill or become injured and will be off work for an extended period of time.
The most common reasons for claims on an income protection plan are musculoskeletal problems, injuries, and mental illnesses. However, the plan will also cover you for other more serious illnesses like heart attacks and cancer.
Your first claim payment will be paid after your chosen waiting period ends. A waiting period is the length of time from when you become ill or have an accident, to the date when we start to pay sickness benefit.