If you were to become unwell and not be able to work, would you be able to pay your mortgage, and other bills continually on the short term statutory sick pay you could claim? Or would you need another source of guaranteed income to tide you over and ensure your bills were paid for until you could return to work or retire? This is where income protection insurance will come in handy and assist in paying those bills and ensuring you have a regular income until you can return to work.
Income protection insurance is an insurance which will guarantee you anywhere from half to two-thirds of your total monthly income before tax, in the instance of you falling ill, having an accident, or becoming disabled.
How long do you have to wait to claim income protection?
There are various wait periods that may apply to your policy before you can make your claim for income protection and these will vary depending on the exact policy you hold. There is a statutory waiting period of anything from 14 days to 720 days depending on the specific policy you hold. This means you can only apply to receive the money from the insurance after this period has expired. This also means that the longer your waiting period is, the more you will have to rely on your savings, annual leave payments, and statutory sick pay benefits. So, be aware of the waiting period that may apply to you and ensure you have enough money stowed away to see you through the period before your claim starts to payout. Remember to always check your policy documents as they will have an exact number of days you will have to wait before you can make a claim.
How long can you claim income protection?
Now for the crucial piece of information, and why you are here. How long can you claim income protection? There are a couple of instances we will cover here, the redundancy scheme for income protection and the illness, injury, and disability cover.
If you were to be made redundant and were to remain involuntarily unemployed you could receive payment from most policies for a period of up to three months. This can vary from policy to policy and you must always check that firstly this is covered by your policy and secondly, the amount of time the policy will pay for a redundancy claim.
If you were to fall ill and were unable to work, you would have to wait out the statutory waiting period to make your claim. Then the policy would payout dependent on the benefit period you have chosen for your policy. Some payments can last between a year or two years, others may extend beyond this timescale and pay until you are able to return to work, or retire, dependant on the lifetime of the policy.
Always ensure that you check the policy documents as they will state the period of cover that you are entitled to and show if there is a maximum number of policy payouts before the insurance cover will stop paying. Remember that you can claim as many times as is necessary over the lifetime of policy but the payments are subject to the relevant terms of your policy. This may include exclusions or limitations on claims.
What factors will affect my premiums and how much will it cost?
The cost of your premiums is wholly dependant on the terms of your policy and as such you should ensure you familiarise yourself with these terms in detail. If you have an extended waiting period (often known as a deferment period) before you are able to make a claim, for example, this can reduce the cost of your premiums. Alternatively, if you have a reduced waiting period it will increase the cost of your premiums.
There are a few other variables that can affect the monthly cost of your premiums. These include the following;
- Your age – the policy price is affected by your age because the older you are when you take out the policy the greater the risk of you falling ill.
- Your sex – if you are male you are likely to pay more because more men make income protection claims than women.
- Your health – If you are healthy and well you will pay less for your premiums.
- Your job – it all depends on what you do as a career and if there are any dangerous elements to what you do. The more dangerous your job, the more you will pay for insurance.
- Your hobbies and lifestyle – If you partake in dangerous activities as your hobbies, smoke heavily, or drink heavily you will pay more for your premiums.
- The waiting period – the longer you are able to wait to make a claim, the cheaper your premiums will be.
- Whether you are prepared to do other types of work than your profession if you are to fall ill. You can reduce the cost of your premiums if you state you will only make a claim if you are unable to take on any work due to your illness or injury – not just the job you previously did.
Can you work while claiming income protection?
It is possible to work while claiming income protection insurance, but this may be reflected in your policy terms and usually allows you to work in an area that is not your chosen profession. If, for example, you previously worked as a builder but you are unable to continue in this job due to the nature of your injury, but you can now work in a clerical role. Never assume you will still be covered if you do start to work while claiming income protection though as you risk invalidating your policy if you wrongly assume it’s ok, and always check your policy documents to ensure it is permitted for you to take on work and still receive payment from your policy.
In short, when you claim for income protection insurance, the period you can claim for will vary from policy to policy. You could receive payment from your claim for a period as short as three months if you are making a redundancy claim. Or it could span a period of a year or two for a claim for illness or injury, or even the lifetime of the policy or until you retire with some policies.
Always make yourself aware of the terms of your specific policy as this will affect the time you have to wait to receive payment as well as how long the payments will continue to be made for.
