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Income Protection

Formerly known as permanent health insurance (PHI), income protection is an insurance policy that pays out if you’re unable to work due to injury or illness.

Income Protection usually pays out until retirement, death or your return to work.

Income protection doesn’t pay out if you’re made redundant. Payments made are based on a percentage of your earnings and are tax free. These policies only pay out once a pre-agreed period has passed, which can range from 1 to 12 months after a claim is put in, the longer you can defer these payments the lower the premiums will be.

Let’s be clear – income protection is NOT the same as PPI. Payment Protection Insurance covers a particular debt and any payouts go to your lender. Income Protection hands you a tax-free percentage of your income if you’re unable to work due to illness or injury to be spent on what you wish.