Income Protection Insurance?

JamieLewis

Hi everyone, I'm looking into getting income protection insurance to protect against redundancy. Does anyone have any recommendations of a good insurer? And how long will it pay me if I am made redundant?

ACG

Have a look at Defaqto.co.uk - its a rating site for different policies. Take it with a pinch of salt as it can be manipulated by the insurers to ensure they get more stars but it gives a good idea.

Redundancy cover usually pays out for either 12 or 24 months depending on the contract.

JamieLewis

Ok, thanks, I'll take a look at that website. I didn't realise it only paid out for a maximum of 24 months- is it different if you cant work because you are ill?

kingstreet

Income protection/replacement is the popular name for the product best known as "Permanent Health Insurance" which pays a monthly benefit to replace your income if you are unable to work due to illness or disability.

The cover is deemed "permanent" because it pays out until you are fit enough to return to work, or the end of the policy term, whichever is shorter. If you have a permanent disability a few years into a plan which you took out until retirement, you could receive payments until you're 65!

This is underwritten at the outset, so this reduces the risk of claims being rejected due to something which pops up later.

Such cover is typically offered by life offices, such as L&G, Friends Life, Exeter Family, Scottish Provident and Aviva and is best found using an Independent Financial Adviser.

Unemployment cover typically only runs for a claim period of 12 months or 2 years, as ACG has said. This is a short-term product supplied by insurers like Pinnacle, First Assist, Paymentshield etc.

Unemployment cover is often underwritten at point of claim, which makes it more difficult to guarantee the chances of a payout.

ACG

PHI/Income Protection is a far superior policy to the AS part of ASU or MPPI etc.

Might be worth a chat with an advisor just to understand the differences and what you actually want.

kingstreet

Where possible, I like to do Unemployment cover with PHI, rather than ASU in one. It is a problem with some occupations and shorter deferred periods though.