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Income Protection

Simply having life assurance may not be enough. What if you lose your job or become seriously ill? You may not be able to work; but you are still alive, your life assurance does not pay out, but you still have all living costs to meet.

Part of our initial review will include advice on protection insurance including:

• Mortgage payment protection - called Accident, Sickness and Unemployment (ASU) or Mortgage Payment Protection Insurance (MPPI)
• Payment Protection Insurance (PPI) covers other loan or credit card payment
• Permanent health insurance PHI or Income Protection Insurance - IPP
• Private medical insurance

Almost certainly the biggest fear for working people is losing their job and not being able to meet their financial commitments. The biggest commitment of all for most people is their mortgage. Government help for the mortgage payments of the unemployed has been scaled back, is means tested and if you took out your mortgage since October 1995 - and that includes a remortgage - you get no assistance for the first 39 weeks - 9 months - of unemployment. After that the government will only pay the mortgage interest, not the capital part of the payment.

You do not need to buy a policy from your lender, nor do you have to buy it when you first take out your mortgage. We may be able to help by finding better value policies.

Permanent health insurance, known as income protection makes up income lost through illness, accident or disability. Rates vary according to the dangers associated with one´s job, age, state of health and gender but PHI is thought to be of particular value to the self employed who do not have an employer to continue paying their salary if they are unable to work.

Critical illness insurance, a critical illness policy pays out a lump sum if you are diagnosed with one of a number of specified 'critical' illnesses during the term of the policy. Many life insurance companies offer policies that cover you for both death and critical illness and will pay out the guaranteed benefit on the first event to happen.

Loan protection insurance covers the policyholder if they lose their income, through illness or accident. This type of policy will help with some or all loan repayments.

Accident Sickness and Unemployment (ASU) can be taken out for any purpose to protect your income and to give you peace of mind. The benefits normally only pay for one year on a valid claim if you have an accident, are ill or become unemployed.

Most of these protection policies operate a 'deferred period' which is the period from when an event happens, that you can claim for, to when the policy starts paying out. You need to check the policy wordings carefully to ensure the policy matches your financial protection needs.

Private medical insurance can cover you for private medical treatment and you can choose to add on extra cover, such as dental cover. You may select the hospitals that you would want to be treated in close to home. As always the more benefits and the more comprehensive policy you select the more it will cost.

Long-term care insurance is designed to cover you against the cost of nursing-home care in your old age and you can pay for it as a lump sum or in regular payments.
Please see our page Long Term Care for more details.

Life assurance add-ons. Rather than assessing the need for one or more of the range of policies, some of which overlap, you can add extras to life assurance policies. This may prove more economical - again we as an IFA can help you to work out the maths. Extras include critical illness cover and "waiver of premium". This means that if you cannot do your usual job because of illness or injury, the insurance provider pays the premiums to keep up your benefits until you recover.