Income protection - is it worth it?

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biged670
biged670 Posts: 408 Forumite
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in Insurance & life assurance
Hi all,

My partner and I are looking into income protection; specifically we would like to make sure the mortgage payments are covered. The information I have read about it seems to have its pros and cons. So as the title asks - is it worth it?

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  • ACG
    ACG Posts: 23,760 Forumite
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    There are 2 types of income protection, short term cover and long term.

    I personally have the long term cover for an amount that will cover my mortgage and a little on top. It costs me £15 a month and includes a few little extras. Is it worth it, for me it is. Especially when you consider the average claim is around 7 years. Not many people have 7 years sick pay through work.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • biged670
    biged670 Posts: 408 Forumite
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    ACG wrote: »
    Especially when you consider the average claim is around 7 years. Not many people have 7 years sick pay through work.

    Do you mean the length of the payment of benefit, or do you mean most claims tend to happen 7yrs after the policy starts?

    We have taken out a level life cover policy which will cover the mortgage balance over the loan term if either of us does die. Regarding sickness we both have 6 months full pay. It's the accident and unemployment benefits I am concerned about.
  • csgohan4
    csgohan4 Posts: 10,597 Forumite
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    income protection is worth their weight if you ever need to claim due to illness. Make sure you are happy when you can claim and how long for.


    Recommend getting a broker who will be able to guide you through this. The life assurance brokers from the MSE article also do income protection as well


    They can be expensive or as cheap as you want. Depends what you would be comfortable with.
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
  • dunstonh
    dunstonh Posts: 116,548 Forumite
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    The information I have read about it seems to have its pros and cons. So as the title asks - is it worth it?

    There should be no cons as long as you are looking at proper income protection (generically known as permanent health insurance - PHI). If you are looking the the budget payment protection insurance (PPI) style then there are a lot of cons.
    It's the accident and unemployment benefits I am concerned about.

    Right. So, its not income protection that you are looking for but PPI.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • ACG
    ACG Posts: 23,760 Forumite
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    Most claims last for 7 years.
    Unemployment cover is typically separate from proper income protection. There are thinks like ASU/MPPI which will pay out for Accident/Sickness/Unemployment (thats where the ASU comes from) but they tend to only pay out for 1 year, some will pay out for 2 years.

    As far as I am aware there is only 1 provider who will pay out for long term income protection with an unemployment benefit which can be bolted on, but the unemployment benefit would normally only pay out for 12 months.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • biged670
    biged670 Posts: 408 Forumite
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    The policies I have been looking at are the short term cover policies. The more I look into everything the more confused I seem to be getting; seems a bit of a minefield.

    I do feel some what scepitical with these type of policies with regards to providers trying to wriggle out of paying claims, rediculous policy exceptions, and claim processes. Anybody had any claims experiences???
  • dunstonh
    dunstonh Posts: 116,548 Forumite
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    The policies I have been looking at are the short term cover policies. The more I look into everything the more confused I seem to be getting; seems a bit of a minefield.

    Especially when you realise that comparison sites don't carry all types of income protection. They only tend to sell the PPI type as its simpler for them to set up.
    I do feel some what scepitical with these type of policies with regards to providers trying to wriggle out of paying claims, rediculous policy exceptions, and claim processes. Anybody had any claims experiences???
    With PPI it is common to come up against exclusions and clauses. They cant wriggle out of paying a valid claim. However, they can limit the claimable reasons.
    With PHI, there are no known issues unless you have gone for a budget type and didnt understand the consequences (PHI can effectively be split into budget, standard and comprehensive levels of quality).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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