Income Protection
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Our Service Standards
The Income Protection Market
Mortgage / Rent Linked Cover
Income Linked Cover
Long Term health Linked Cover
How quickly can I get cover?
Can I buy more than one type of policy?
Frequently Asked Questions (FAQ's)
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Our Service Standards
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| You may feel you know exactly what you mean by the phrase “Income Protection”. We have come to realise that there is a big difference between what people within the financial services industry call income protection and what the majority of customers understand it to mean and actually want. We want to give you every opportunity of buying a policy that does exactly what you want it to do. We therefore offer all types of policy that could be considered by the general public as income protection. This website is packed full of information about those policies and how they work.
If you have not yet used it, our calculator above will give you a good indication of what policy is likely to be most suitable for you. Obviously the choice is yours. Once you have identified the type of policy you want, you can click to get a more defined quote and more information on your selected policy.
We care about your privacy. Unlike many other internet companies we are able to provide you with initial quotes without requiring you to enter personal contact information.
As we are a fully independent financial services company we could offer you a range of policies from all the leading providers and hope that you buy one. However we like to add some value by indicating policies which we believe are good quality policies that will do what you expect them to do. We therefore only feature one policy of each type. We are keen to point out that we do not receive enhanced terms from these insurers for featuring their policy. This of course gives us the ability to instantly offer a different policy if we feel it is better than the one we are currently offering.
In some instances we will need to substitute our main featured policy for an alternative. We will only do this if for some reason you are not eligible for our main product. Our price promise is to always offer the cheapest policy first.
Ultimately which policy you buy is down to you, it is not possible for us to offer an advice and recommendation service via a website. We do however provide complete information on each policy so you can make an informed decision before you buy.
Below is some general information on the income protection market and the key features of the three product types you can use to protect your income. Each of the product pages is also full of important information about your policy, as well as links to policy documents and other information. |
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The Income Protection Market
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| When people in the financial services industry discuss income protection they are invariably referring to a product known as “Permanent Health Insurance” (PHI). This is a policy that could pay you a percentage of your income if you are unable to work due to accident and sickness.
The policy has the potential to continue paying you an income until you reach retirement age. We no longer feature such a policy on this website as our experience is that most people want to protect their income against unemployment and redundancy in particular. Permanent Health Insurance policies do not cover unemployment. Depending on your circumstances, you may wish to buy a mortgage linked unemployment policy and a health linked long term accident and sickness policy.
There are three distinct insurance policy types that you need to consider to protect your income. For some people, only one of these policies may be appropriate, while for others it could be possible to buy all three.
For your information the three policy types are :
Accident, Sickness and Unemployment Insurance linked to your mortgage. Benefit may also be linked to a percentage of your income.
Accident, Sickness and Unemployment Insurance linked to your income
Medically Underwritten Accident and Sickness Insurance linked to your income
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Mortgage Linked Cover
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For many people this will be the cheapest option. If you are looking to include unemployment cover, then you should take as much cover as possible on the property linked policy as it will work out cheaper.
Many mortgage linked insurance policies will directly link the amount of benefit you can have to your mortgage payments. Typically they will let you insure all of your mortgage related costs (mortgage, buildings and contents, life insurance etc) and increase this amount by around 25%. However if your mortgage payments are £400 per month, this would mean that you could only buy £500 of cover. If you wanted £1,000 of benefit, you could not cover it all on such a policy.
In such a circumstance you may need to buy both a Mortgage Payment Protection Policy and an Income Protection policy to get the maximum cover at the cheapest premium. This is called running policies in tandem. It is important that you check whether your insurance provider will allow you to run policies in tandem. Most insurers do allow this.
It is important that you make sure that you do not buy more cover than you need. Besides having a maximum amount of cover available in the policy, many policies will also not cover more than a certain percentage of your income. Typically no more than 50% - 60% of your gross earnings. Assuming your policy has a 50% limit, even if the maximum amount of cover you could buy is £1,500 per month, if 50% of your gross earnings were £1,000 that is the maximum amount you should buy. If you purchased the maximum cover (£1,500), in the event of a claim the insurer would reduce the payment to £1,000 per month.
All policies have an exclusion period when you first buy the policy. This exclusion is for unemployment. The policies on this site have a 120 day exclusion period. This means that you cannot make a claim for unemployment during this initial 120 day period. The insurer may waive the exclusion period if you take out the policy to protect a new mortgage or new remortgage, or if you are transferring cover from another insurer. There is however no exclusion period for accident and sickness cover.
If during the policy exclusion period you discover you are going to lose your job, you will not be covered. This is case even if your employer doesn't make you redundant until after the exclusion period expires. |
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Income Linked Cover
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| If you are looking to insure yourself against redundancy but have no mortgage then this will be the only cover available to you. There are surprisingly few policies in the UK that will allow you to insure yourself against unemployment if there is no associated liability such as a mortgage or similar loan.
Our featured policy will allow you to insure up to 50% of your gross income up to a maximum benefit level of £1,500 per month. The policy has a 120 day exclusion period at the start for unemployment. This means that you cannot make a claim for unemployment for any event that occurs during this initial 120 day period. There is however no exclusion period for accident and sickness cover.
Since the credit crunch occurred (2008) policy terms and conditions have changed considerably. Premiums for Unemployment Only cover have gone up considerably. When you produce a quote on our system, we recommend that you may want to consider adding accident and sickness cover to your unemployment insurance. For a relatively small additional sum you will be able to include an additional valuable benefit. |
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Long Term health Linked Cover
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| This type of insurance is also known as Permanent Health Insurance. These policies can pay you a benefit for a long time, potentially for as long as 40+ years. Therefore before these policies are sold, comprehensive medical questionnaires need to be completed. These policies cover accident and sickness only. If you are looking to insure yourself against accident and sickness, you should consider this type of policy first as it has the potential to pay you for many years.
The other policies above have a short maximum pay-out period, typically a year. This type of policy could pay out for many years. For example, a 25 year old person buys a policy but when they are 30 they have an accident which results in them never being able to work again. Assuming they have bought the most common type of policy, the insurer will pay them a monthly income until they reach the age of 60 - a 30 year pay-out period.
It is also possible to increase the benefit each year by either a specific percentage or by a well known index such as the retail price index (RPI). This is known as indexation. As this policy could pay you an income for many years you may consider it prudent to have the benefit increase each year. The aim of the indexation option is to ensure that your benefit keeps place with inflation so that you can maintain your standard of living if you are claiming on the policy for a number of years. In cases of very high inflation your policy may not keep up with inflation as insurers tend to put an upper limit on the increase they will offer.
In the event of a claim, the policy will continue to pay out until you either return to work, retire, recover (and choose not to return to work), the policy term ends or you die.
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How quickly can I get cover?
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| In the case of the mortgage and income linked policies, it is possible to set the policy up within a couple of days, and usually much quicker. Once we receive an application we log it on to the insurers' systems within 24 hours.
More providers are moving towards underwriting the policy at the point of application rather than at the point of claim. This underwriting process can take anything from a couple of hours to a couple of weeks. If the underwriter accepts the case then the policy can go live immediately. The benefit of underwriting the policy at the point of application is that (assuming you have answered all the application questions truthfully) there can be no dispute over the payment of a claim. |
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Can I buy more than one type of policy?
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| It is possible to buy more than one type of policy as long as you are not over insured. Many people may buy two or more policies to get the cover they require. Most insurers, and certainly the ones we use on this website, will allow you to run policies in tandem. In our experience there are two main reasons why people will run policies in tandem. The first instance is for people whose income is greater than could be covered on just one policy. The other cases are for people who want the benefit of unemployment cover as well as long term accident and sickness cover. In this case they would take a short term redundancy policy and a long term health linked policy.
If you are thinking about buying more than one policy, it is important to make sure you are not over insured. We are happy to calculate this with you, based on the policies you have selected. |
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Frequently Asked Questions (FAQ'S) Please also see our Product Specific pages for more FAQ's |
Can I Claim while I am on benefit?
Can I claim if I don’t get Job Seekers Allowance?
If I am employed in a family business, can I take out unemployment insurance?
Can I have unemployment cover if I’m a company director?
If I am self employed can I protect against unemployment?
Is there unemployment cover with no exclusion periods or low exclusion periods?
Can I have unemployment cover if I’m on a fixed term contract?
Can I claim for unemployment cover if I am made voluntarily redundant?
Can a business owner claim for unemployment insurance if their business closes?
Do you offer joint redundancy policies?
Can I have unemployment protection if I don’t have a mortgage?
Why can’t I cover my full salary against accident sickness or unemployment?
Can I take out unemployment or redundancy protection if I work in the financial services or banking sector?
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Can I Claim while I am on benefit ?
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| If you lose you job, you will need to be eligible to claim for Job Seekers Allowance in order to make a claim for unemployment on your ASU policy. We cannot guarantee how this may or not affect other benefits, and we would advise you to contact the Benefits Office if you have any questions relating to this matter.
Any claim for accident and sickness is unlikely to affect any existing benefit claim, although again you should check with the Benefits Office.
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Can I claim if I don’t get Job Seekers Allowance?
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| YES. It is a condition for ASU policies that you must be eligible to claim Job Seekers Allowance (even if you are not in receipt of it) in order to make a claim for unemployment.
It is possible to be eligible for Job Seekers Allowance but not receive it, this is because there are two types of allowance, one of which is means tested. We cannot say which type of benefit you will be entitled to.
Amongst other things being eligible for Job Seekers Allowance demonstrates that you are part of the UK tax / benefits system. It also demonstrates that you are actively looking for work as the benefit isn’t paid to people who are not active in the job market.
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If I am employed in a family business, can I take out unemployment insurance?
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This varies greatly between insurers - some insurers will consider that as you are related to the business owner, they will have too much influence over whether or not you are made redundant. Therefore usually you would be classed as self employed, and the business will need to cease trading completely, with final accounts submitted to the Inland Revenue, before you can claim for unemployment.
An insurer might classify you as an employee if you do not have any controlling influence within the business. If you feel this may apply, then please give us a call on 08450 55 95 65.
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Can I have unemployment cover if I’m a company director?
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Yes you can.
If you do not have a controlling shareholding, and have a formal contract of employment, then the insurer will usually classify you as employed for the purposes of claiming for unemployment.
However, if you have controlling shareholding as well as a directorship, then you may be classified as self employed
by the insurer, and the business will need to cease trading completely, with final accounts submitted to the Inland Revenue, before you can claim for unemployment.
It is also important to note that some insurers may reduce the maximum amount of cover that can be offered to company directors.
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If I am self employed can I protect against unemployment?
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Yes self employed individuals can protect themselves against unemployment.
However the conditions for claim differ greatly between insurers. For a self employed person to make a claim, your business must have ceased to trade completely. You will also need to have submitted final accounts to the Inland Revenue, and be registered as unemployed and available for work with the Department for Work and Pensions.
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Is there unemployment cover with no exclusion periods or low exclusion periods?
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| All insurers require you to go through an initial waiting or exclusion period at the start of the policy. This period at the start of the policy during which it is not possible to make a claim is to stop people who are aware of
impending unemployment applying for a policy.
It is possible to have no exclusion period on mortgage related policies under certain conditions, please see our property linked cover page.
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Can I have unemployment cover if I’m on a fixed term contract?
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This varies greatly between insurers. Some insurers will consider your application if you have been on a contract with the same company for the last 12 months, others will require that your contract has been renewed at least once in 12 months or twice in 6 months.
However in the event of a claim for unemployment, the insurer will either pay you benefit up to the end date of the fixed term contract, or in some circumstances for the full 12 months of the policy. This will depend on your contract history.
If you are on a fixed term contract, please call on 08450 55 95 65 to discuss your case.
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Can I claim for unemployment cover if I am made voluntarily redundant?
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If you opt to take voluntary redundancy, the majority of insurers will not pay out in these circumstances. However if sufficient people do not take the voluntary package and the employer decides to make people compulsorily redundant, and so you are made redundant against your will, then your policy will pay out. Redundancy is the most common cause for people claiming on their policy, this is why many people refer to it as Redundancy Insurance, however most polices cover other means of becoming unemployed on their policies.
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Can a business owner claim for unemployment insurance if their business closes?
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To make a claim for unemployment, your business must have ceased to trade completely. The majority of insurers will require final accounts to have been submitted to the Inland Revenue. You must also register as unemployed and available at work with the Department for Work and Pensions in order to make a claim.
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Do you offer joint redundancy policies?
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| Some insurers will allow you take out joint policies, others prefer you to take out two single policies. Typically the premium is identical whether you buy one policy with 100% of the cover for one person only, or if you take a joint policy and split the benefit, say 50% each.
Please also see our property linked cover and income linked cover pages for more specific information on joint cover in relation to these policies.
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Can I have unemployment protection if I don’t have a mortgage?
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Yes, you will need to purchase a policy that is linked only to your income.
You will need to opt for our income-linked policy which is based on a percentage of your gross proveable income.
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Why can’t I cover my full salary against accident sickness or unemployment?
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| Insurers tend not to cover the full amount of your income as it could be argued that you would be financially better off being out of work, than in it. Insurers usually apply a maximum percentage of your income that they will allow you to claim benefit for, and this can vary from 50% to 75%.
However there are some policies where if you are party to a liability such as a mortgage, if the monthly mortgage payment were more than your income (this sometimes occurs with couples), you can insure yourself for the full mortgage amount even if this is more than your income. If you are interested in such a policy please call us on 08450 55 95 65.
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Can I take out unemployment or redundancy Insurance if I work in the financial services or banking sector?
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Towards the end of 2008 Some insurers stopped taking any applications from the financial services sector. This was due the events that have subsequently become known as the "Banking Crisis". This situation has largely resolved itself and cover is available for the financial services sector.
Whenever you make a claim on an unemployment policy, your claim will be assessed on whether they believe you had prior knowledge that your job was at risk of redundancy at the time you took out the policy.
If you buy Redundancy Insurance and you are made redundant shortly after taking out the policy, the insurer will therefore look carefully at your claim to make sure that the redundancy could not be linked to media announcements and uncertainty in the banking sector.
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| These notes are intended as a guide only. They should not be considered as specific advice. They are not a Personal Recommendation.
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