Income Protection
Income protection provides you with regular income if you cannot work due to medium or long-term illness or injury. It is available to those in full-time employment and those who are self-employed. It protects you if you are out of work for long periods due to illness or disability, however, it does not cover you if you are made redundant. To qualify for income protection cover you must typically work at least 16 hours per week.
In order to ensure you have a financial incentive to return to work, income protection cover is usually limited to 75% of your pre-illness earnings, less the single person’s Disability Allowance. The cover pays out if you are out of work for longer than a period known as the ‘deferred period’, which typically ranges from 8 to 52 weeks. It will continue paying out until the insurer determines you are fit to return to work, some cases the insurer may be willing to pay a partial benefit for a period if you return to work on a part time basis.
Income protection premiums are deductible for Income Tax against your earnings at your marginal rate, subject to a limit of 10% of your total income.