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What is Income Protection?
Income Protection pays you a monthly benefit proportionate to your income earned at point of claim if you were to suffer a long-term illness or injury within the term.
The amount of cover should be sufficient to cover your monthly expenditure giving you and your family financial security and to maintain your lifestyle commitments.
An income protection policy is paid out after your chosen deferred period, which typically ranges from 1 to 6 months but can be longer and is generally taken until retirement.
This is available on a short term and full-term payment period, meaning the duration of pay-out on a successful claim depends on your individual circumstances and budget.
Do I need Income Protection?
Ill health can happen to anyone at any time. We all hope for the best but very few plan for the worst. It would be prudent to consider this policy as it effectively provides you with a monthly benefit based on a percentage of your income.
Many employers offer this benefit for on average of 6 months, however often long-term illnesses such as cancer may have a treatment and recovery period much longer than this.
An income protection policy can provide you an income which may be used to cover your mortgage/rent and household bills, giving you the peace of mind to focus on your recovery and family.
When will I get a pay out?
This is paid out after your chosen deferred period and is generally taken until retirement.
The length of pay-out depends on if you choose a full-term cover or a short claim period such as 12 months based on your individual circumstances. The monthly pay-out stops as soon as you are able to return to work.
How much does it cost?
How much does it cost?
The cost of income protection cover depends on the following factors:
• Your age at enquiry
• Your smoker status
• Amount of cover you are looking for
• Your occupation & income
• Your lifestyle
• Your health
• Type of cover
•Term of cover
We can offer you a range of products tailored to your budgetary requirements and still provide valuable cover.
Our advisers will recommend the best product on the whole of market for you based on your individual needs and circumstances.
Jay was working as a regional sales manager at an IT company with an annual salary of £60,000. His wife Seema was an administrator and was on a lower income of £20,000. They also have three children under the age of 16.
Jay & Seema had a mortgage of £310,000 and were paying around £1,450 per month towards it. Together with council tax, food, transport, household bills and non-essential expenditure, their monthly expenditure was around £2,800.
One weekend, Jay was involved in a terrible car accident and suffered from serious injuries which took 6 months to recover from. Unfortunately, the company he worked for didn’t have any income protection benefit in place for him and as a main breadwinner, the family would not have been able to keep up with their monthly expenditure for long on their savings.
Luckily for Jay, he had taken a full-term income protection policy when he took out his mortgage, leaving nothing to chance. The policy provided him with £3,000 per month which was based on a proportion of his income. The insurer paid out after a 4-week period as per his policy which gave him and his family peace of mind that his financial commitments would be taken care of, so he could focus on his recovery.
Things to Consider:
1. Income protection only pays out on the diagnosis of an illness or injury leaving you unable to work.
2. You cannot have more than one income protection policy unless they do not both pay you at the same time. This will depend on your deferred and pay out period. Our advisers can discuss various solutions to fit your requirements.
3. Income protection does not pay out on unemployment. Accident, Sickness and Unemployment (ASU) policies do pay out on unemployment however these are subject to strict conditions and often short term.
Why Re-mortgage my house?When you agree to a mortgage deal, you get an initial rate or introductory rate. However, this initial rate will come to an end – whether that’s in 2, 5,10 years’ time, when that happens, you’ll move on to your lenders Standard Variable Rate (SVR). Re-mortgaging will allow you get the best rates again.
Can I get a mortgage?This will depend on your individual circumstances and finances. We will work with you to find the best rates and offers to help meet your mortgage objectives and goals.
How much deposit do I need?There are now some lenders offering 5% mortgages, however there will be some criteria to be met. Once we know your circumstances and what type of mortgage you require, we can let you know the amount of deposit you will require.
Can I get a mortgage as self-employed or as a contractor?In a short answer, yes. It will depend on how you are operating (sole trader, limited company, contractor) and some lenders may require 2 to 3 years’ of accounts. We will guide you through the whole process and look at your personal situation to find the right lender for you.
You can trust Crystal Financial Solutions with your Business Protection
Whole of market – this means we are not tied to any insurers and can use all the providers available to us in the market.
We understand the complexity of different companies and we’re here to bridge that gap to make the whole protection process as simple as possible.
We provide independent, bespoke and unbiased advice.
With Crystal Financial Solutions operating for 20 years, you gain from the wealth of its experienced advisers.
We provide a crystal clear/bespoke solution based upon your circumstances to match the best products to your financial circumstances.
We help you throughout the whole process and not just once the products have been implemented.
Speak to one of our Income Protection specialists
Leave your details below and one of our advisers will be in touch to discuss your next business protection policy and book you in for a detailed consultation.
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