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Income protection

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What is income protection insurance?

Income protection refers to a family of insurance products which ensure you can continue to meet your financial commitments if you are forced to take an extended break from work.

If you can’t work because you’ve had an accident, fallen sick, or lost your job through no fault of your own, income protection insurance pays you an agreed portion of your salary each month. You can then use the money to cover debt repayment, bills and other costs. Income protection is especially useful for people working in dangerous industries who want to be sure their mortgage will always be covered.

Income protection only covers events beyond your control: you’re much less likely to be covered if you’re fired from your job or if you injure yourself deliberately.

Types of income protection

There are three main types of income protection insurance to choose from:

  • Accident, sickness and unemployment

    ASU isn’t tied to a particular debt – youreceive up to 50% of your normal salaryeach month for a year or so

  • Payment protection insurance

    PPI sees your insurer make up part or all of the repayments on your outstanding loans, normally for up to two years

  • Mortgage payment protection insurance

    MPPI is designed to make sure yourmortgage is covered if you can't work,usually for around 12 months

Short-term vs long-term income protection

Most income protection insurance policies are short-term: they pay out for a set period, usually up to two years, while you get back on your feet and return to work.

Long-term income protection is available too, will provide a regular income for a longer, pre-agreed period until you are well enough to return to work. Unlike most short-term income protection policies, it will generally not cover you if you are made redundant. There are two types:

  • 1

    Own occupation

    This policy will pay out if the holder is prevented from doing any aspect of their job due to an accident or illness. Premiums are more expensive because there is more cover

  • 2

    Suited tasks

    This type of policy is cheaper, because your insurer won’t pay out if it decides that even though you can’t do your main job, your employer has other types of work you can still do

Top industries where people take out income protection

Income protection cover is available for everyone, but there are certainindustries where it’s most popular. These include:

  • Construction and property

  • Manufacturing

  • Engineering

  • Information technology services

Income protection is a short-term insurance product which people take out in case unforeseen circumstances prevent them from working for a set period – for instance injury, illness or redundancy.

Income protection is an umbrella term for a range of insurance projects, including policies which make repayments on a mortgage or specific loan, to a general pay-out for people who find themselves out of work. So if you lose your job, you know you can keep up on your mortgage and keep your household going.

Yes, income protection insurance covers you if you lose your job – provided you lose it through no fault of your own. If you’re fired for something bad you’ve done, or if you leave the job without another one lined up, your policy most likely won’t pay out.

If you opt for Accident, Sickness and Unemployment (ASU) insurance, it probably won’t cover your full salary – most policies pay out a decent percentage of your total monthly take-home.

Certain income protection policies are available for people who are self-employed. You need to specify your employment status with your insurer, and the terms may be a little different – but self-employed ASU policies do cover you in the event you can’t work due to illness or injury.

Most income protection policies are designed for the short-term, so they tend to pay out for 12 months, or 24 months in some circumstances. After this period, if you’re still too ill to work, the government should hopefully pick up the slack.

Mortgage Payment Protection Insurance designed to cover your mortgage if you lose your job through no fault of your own. 

When you apply for income protection, you specify to your insurer what you want your insurance to cover, be it your income, your mortgage or loan repayments.

The income protection insurance offered by MoneySuperMarket is not agreed between your insurer and your mortgage or loan lender. Instead, once you successfully made your claim, you will receive monthly instalments of an agreed sum. You then make your repayments to your creditors in a separate transaction.

You work hard to earn your money, and we don’t think you should waste a penny of it paying over the odds on your household bills. That’s why at MoneySuperMarket, we’re on a mission to save Britain money.

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So how do we make our money? In a nutshell, when you use us to buy something, we get a reward from the company you’re buying from.

You might be wondering if we work with all the companies in the market, or if our commercial relationships with our partners might make us feature one company above another. We’ve got nothing to hide, and we want to give you clear answers when it comes to questions like these, so we’ve pulled together everything you need to know on this page.