Income Protection Insurance
Some people believe their home is their biggest asset. At Mortgage IQ we believe your income is your biggest asset – after all if you have no income how will you maintain repayments on your mortgage and cope with the day to day costs of living? Your Mortgage IQ adviser will always ensure you are fully aware of the options available to you to protect your income.
What it does
Income Protection Insurance pays out a regular tax-free replacement income if you become unable to work because of illness, injury or – with certain polices – unemployment. It could help you keep up with your mortgage repayments or rent, and other day-to-day living costs until you are able to return to work.
Cover can be purchased that will pay you a monthly income either until your planned retirement age, of for a limited amount of time (which will result in a cheaper premium). Income Protection policies also have a waiting period (sometimes known as a deferred period) before they pay out, which begins when you become unable to work. The longer the waiting period, the lower your premium. It’s a good idea to find out what your employer would pay you if you were unable to work and what State Benefits may be available, so you can choose an appropriate waiting period.
Your Mortgage IQ Adviser will consider these points, along with any other insurance policies you already have, to help you decide. The premiums you’ll pay will vary depending on these factors and others such as your age, health, the nature of your job, or course, the level of income you wish to protect.
Why you might need it
If you become ill or suffer an injury during your working life, an Income Protection policy can help protect against any possible loss of income, and speed your return to work. You may find it useful to consider how much you spend maintaining your current lifestyle, and the impact of any loss of income, by using the table opposite.
Other types of protection insurance
Payment Protection Insurance and Short Term Income Protection Insurance (along with Mortgage Payment Protection Insurance and Accident, Sickness and Unemployment Insurance) can provide a monthly income to help cover your regular outgoings if you can’t work due to an accident, illness/injury or, often as an optional extra, unemployment. There are important differences between these products and Income Protection Insurance will pay out for as long as you are unable to work (up to the policy expiry), although shorter payment periods are available from some insurance companies which reduces the cost of these plans.