When you suffer a serious illness or injury, the last thing you should be worrying about is how you’ll pay the bills while you’re off work. After all, what if your sick pay runs out while you’re still recovering? Income protection insurance pays you a monthly tax-free income until you’re well enough to go back to work – and you can use this to help pay your bills, mortgage or medical costs. Even if you can’t go back to work, income protection with Vitality will pay you an income for the rest of your policy term.
Why do I need income protection?
The primary benefit of income protection is that it ensures you don’t fall behind with your monthly bills such as your mortgage if you’re ever off work due to illness, injury or disability.
But couldn’t I just rely on state benefits?
Ultimately it depends on how much you need to maintain your current lifestyle, and what current financial commitments you have in place. Based on Vitality’s understanding of the current state benefit system, even if you qualify for state benefits, Employment and Support Allowance may only pay between £101.15 and £108.15 per week… Could you and your family survive on this level of support?
For more information on the State benefits system, you should contact your local Department for Work and Pensions.
When’s best to get covered?
You can take out income protection cover any time you like, but most people tend to think about taking out a plan when they’re changing jobs, getting married or starting a family.
How much does it cost?
As with most insurance policies, your premium will depend on a few things, such as –
- Your age
- Your medical history
- Your family’s medical history
- Your job
- How much alcohol you drink
- Whether you’re a smoker or use any tobacco products
- Whether you choose comprehensive, primary or short-term income protection
Can I get income protection insurance if I’m self-employed?
Yes – even if you’re self-employed you can choose from any of the Vitality plans. Income protection adds an extra layer of financial security for self-employed people who won’t have SSP to rely on should they be signed off work.
If you want even greater financial security, you can also choose to start receiving pay-outs from as early as seven days – and for many conditions, Vitality will backdate the payment so you can also get paid for those seven days.
What cover options are available?
When picking your plan, you need to decide whether you want long-term or short-term cover –
- Short-term income protection gives you pay-outs for a maximum period of 24 months per condition
- Primary and comprehensive plans can give you pay-outs for as long as the plan lasts, if you can’t or are unlikely to ever work again
Can I tailor my plan?
Once you’ve decided whether you want short or long-term cover, you can add any of these extra options to your income protection plan –
- Extra protection – to give you more peace of mind, this lets you protect a higher amount of your income; up to 60% of your gross income for the first £30k per annum, and 50% thereafter with Vitality’s comprehensive cover
- Protecting the value of your cover – to protect the future value of your pay-outs, you can choose to automatically increase your cover in line with the Retail Price Index (RPI) up to 10% per annum
- Permanent disability uplift – to reflect the bigger impact on your finances should you become permanently disabled, you can choose to increase your benefit by 10% – with Vitality’s comprehensive cover
- Premium waiver – you can choose to stop paying premiums, if you ever make a claim. With VitalityLife comprehensive cover, you can also choose to stop paying any VitalityHealth premiums too
- Guaranteed insurability option – however your personal circumstances may change over time, you can always choose to be eligible for cover
How much can I claim with income protection insurance?
With comprehensive cover from Vitality you can protect 60% of your gross salary for the first £30,000 per annum and 50% thereafter – and because it’s tax-free it should replace most of your net salary.
For example, if you earn £50,000 per year, you’d receive 60% of the first £30,000 (adding up to £18,000) and 50% on the remaining £20,000 (adding up to £10,000) – giving you an annual benefit of £28,000.
When do you start paying out after I claim?
You’ll get your first payment at the end of your deferred period, which you set when you take out your plan. Your deferred period starts on the first day you’re unable to work and ends when you have been continuously incapacitated for either –
- 7 days (only an option if you’re self-employed)
- 1 month
- 3 months
- 6 months
- 12 months
Do I get a pay-out at the end of the policy if I don’t claim?
The policy is designed to only pay out if you’re unable to work due to an accident or sickness during the term of your policy – once your policy has reached its end date, your cover stops and you won’t get anything back.
What does ‘guaranteed payment amount’ mean?
This means Vitality will guarantee you receive the agreed amount when you claim, based on your salary when you apply – even if your income goes down.
If you think that you would benefit from income protection or would like more information, get in touch with one of our friendly advisors today!