Quick guide to our Short Term Income Protection Insurance
Whereas other providers may charge an extra premium (when giving an income protection insurance quote) depending on a person’s lifestyle and occupation and pastimes (and many occupations may not be acceptable at all), here at Income Protection UK, all acceptable occupations and lifestyles carry the same premium.
Discover the basics of income protection insurance quote, including what it covers, why you should consider it and the factors that may affect your premium.
Key Facts at a Glance
• offers tax-free monthly payments for up to 12 months if you are unable to work.
• covers your chosen combination of Injury, Illness, Involuntary Redundancy or Business Closure.
• should be considered alongside, and is complimentary to, building up your own nest egg, critical illness cover and life insurance.
• Our policy will still pay out TAX FREE cash even if you are being paid while you are off work.
What is Income Protection Insurance?
Short Term Income Protection, also called STIP or ASU insurance, will provide cover if you are unable able to work. Unlike the old Payment Protection Insurance, (PPI) the benefit is not to cover a loan or a mortgage alone but can be used in any way that you wish, such as to pay rent, pay your mortgage, regular monthly bills or any other commitments you may have. The choice of how you spend the money is yours.
Our income Protection Insurance quote will typically provide three types of protection: against loss of income through being unable to work as a result of, 1: Illness, 2: Injury, 3: Involuntary redundancy or Business Closure.
If you are Employed, you will be able to protect up to the lowest of 65% of your gross monthly income, 125% of the sum of your regular provable monthly expenses or £3,000 per month.
If you are running your own business, or working for a relative who is, you will be able to protect up to the lower of 125% of the sum of your regular provable monthly expenses or £3,000 per month.
It is designed to cover the loss of your income and will pay out a monthly sum, tax-free, every month to a maximum period in any one claim of 12 months, but with no limit on the number of claims you can make.
This will help ease any financial burdens whilst you are unable to work and of course give you substantial peace of mind that your mortgage, rent and bills will be covered.
If you are out of work because of Involuntary Redundancy or Business Closure, our complimentary Fresh Start Back Into Work service will assist you to find a new job.
Should you have income protection?
Income protection can be a useful product for you if you need to cover your monthly income if you are unable to work.
Our policy will still pay out even if you are paid while off work sick.
Income Protection Insurance is normally taken out if you:
• would find it hard to make ends meet if you had no incoming salary.
• have family dependants.
• if you are running your own business
What is the length of the policy?
A Short Term Income Protection policy will provide cover up to retirement age of age 65. Short Term Income Protection will generally pay out (1 month in arrears) after a deferred period sometimes known as the “Waiting Period” – which you choose between 0, 30 or 60 days. The longer the deferred/waiting period you choose, the lower the monthly premium.
Long Term Income Protection formerly Permanent Health Insurance – IP
• Cover against only Accident or Sickness, no cover against Unemployment.
• Strict underwriting on smoker/non smoker, height/weight ratio, family medical history.
• Much higher premiums than STIP because claim benefits are ultimately payable to retirement age.
• With some providers Illness/Injury claims payable only if unable to work at ANY occupation.
• Age related premiums, with extra premiums charged for higher risks.
• For Illness/Injury cover, this type of policy provides the highest quality cover, but not everyone will be able to have this cover, and many people will not be able to afford it.
• If this is the cover you require, you should seek advice from an Independent Financial Adviser. (referral form with disclaimer)
Short Term Income Protection – STIP
• Cover against Accident Sickness & Unemployment.
• Factors such as smoker/non smoker, height/weight ratio and family medical history ignored.
• Much lower premiums than Long Term IP because claim benefits are usually payable for a maximum of 12 months.
• With some providers Accident/Sickness claims payable only if unable to work at ANY occupation.
• Level or Age Related premiums are available, with Pre-Existing Conditions excluded for the life of the policy.
• For Accident/Sickness cover, nearly everyone will be able to have this cover, and afford to buy it.
• Hardly any product providers publish their claim, approval rates.
• Very little Unemployment cover is bought by Clients running their own business because it is a product designed for employed people, and Clients running their own business found it almost impossible to make a claim.
How much cover will you need?
The question you have to ask yourself is, you
“How long will my savings last”
“how will I pay my mortgage or rent and bills, if I suddenly lost my income?”
If the answer to that is: “less than 12 months…”
…then you need Short Term Income Protection Insurance.The amount of cover you will need depends on your individual circumstances as a “one size fits all” approach will not work for most people. You need to ensure you tailor your cover to your individual needs.
A simple rule of thumb, on average Illness/Injury claims last for 4.5 months, and Involuntary Redundancy or Business Closure claims for 9.5 months. Start with your family’s total monthly net income (after Income Tax and National insurance, deduct from this the amount you regularly save (long-term savings not short-term such as a holiday fund), then see how long you can survive without income.
• Family net monthly income £2,200 and savings £200 per month.
• Illness/Injury cover – do you have savings of £9,000 or more?
• Involuntary Redundancy/Business Closure cover – do you have savings of £19,000 or more?
• Another thought – even if you do have enough savings, bearing in mind how long it took to build to your present savings level, would you be happy for one incidence of unemployment to wipe them out completely.
Our Short Term Income Protection insurance cover will provide you up to the lower of 65% of your gross monthly income or 125% of your allowable monthly expenses and is paid TAX FREE. You can reduce your premiums by insuring a smaller percentage of your salary or outgoings.
The benefit chosen is subject to an overall maximum which, for the Income Protection UK DMS products is amongst the highest available in the market at £3000 per month.
At some time or other, you may need funds for a rainy day and you may have saved up for one of those eventualities. Be aware however that you will need a large rainy day sum to match the level of cover that you can get from our Short Term Income Protection Insurance.
Please remember also that once you have spent your rainy day money, it has gone forever and you will have to start saving again. Disaster could well strike again before you have accumulated enough money to live on if you lost your income for any reason.
Income Protection Insurance Types
If you have decided you need income protection insurance product, consider the type of policy that best fits your individual needs.
Type of policies include:
Many other providers policies increase the premium as your age increases. However, with I
ncome Protection UK DMS policies the premiums do not increase with age. Our premium rates are
based on your “age at entry”, and are grouped in bands: 18 to 30, 31 to 35, 36 to 40 and 41 to 59. The band that applies when you buy the cover, is the band that will apply for the life of the cover.
Unlike other providers policies, Income Protection UK age-related policies will not normally be affected by your lifestyle or your occupation. Whereas other companies will charge an extra premium depending on a person’s lifestyle and occupation and pastimes, here at Income Protection UK, all occupations and lifestyles normally carry the same premium for each age band. From time to time, cover for some industries may not be available at normal rates, or at all.
What about existing illnesses?
You can get an instant income protection insurance quote by clicking the link below. When you see just how affordable this cover is, submit your application online in minutes. Submitting an application does not commit you in any way and you can cancel at any time. You will generally get a reply back within an hour, telling you the status of your application and cover.
You will also be advised if any risks are not acceptable and if any exclusions or special conditions will be applied.
Please remember that by submitting an application, you are not committing to buy the cover. You can still cancel at any time and within the first 30 days, you will receive a full refund of any money you pay. You can cancel at any time afterwards by simply stopping the direct debit instruction at your bank, or advising DMS. You will incur no further liability, but of course, the cover will cease as soon as the premiums stop being paid.
If you make a claim, how soon will you be paid ?
Your job is made redundant on December 31.
You receive 3 months pay in lieu of notice.
When you will receive your first claim payment depends on the cover package you selected:
On day 31 from day 1.
On day 61 from day 31.
On day 91 from day 61.
|First monthly benefit payable||On day 31 from day 1||On day 61 from day 31||On day 91 from day 61|
|Payment in lieu of notice||January 1 to March 31||January 1 to March 31||January 1 to March 31|
|Day 1 of your claim||April 1||April 1||April 1|
|Waiting period ends||April 30||May 30||June 29|
|First claim payment due||May 1||May 31||June 30|