income protection insurance

AlisonHarrison

A friend of mine earns about £60,000 pa. He now wishes towork for himself. I think he will trade as a limited company.
Is it possible to take out income protection insurance so that if the business fails he will be able to claim on the insurance?
If not would it be better to take out the income protection insurance before he hands in his notice (probably in about 9 months time)

dunstonh

Is it possible to take out income protection insurance so that if the business fails he will be able to claim on the insurance?

That would be payment protection and not income protection. he can but there will be limitations.

If not would it be better to take out the income protection insurance before he hands in his notice (probably in about 9 months time)

Payment protection applies to the job at the time of claim. Not when the policy is taken out. Income protection is job at the time of commencement but income protection does not offer unemployment cover.

ACG

Income Protection is there to cover for illness - this will pay out if he becomes ill whether employed or self employed (providing its proper income protection by a life office and not a general insurer).

It sounds like you want unemployment cover to some extent. As Dunston says it is possible but it has to meet certain criteria before it pays out - i think the main one being the business must be involuntary wound up...but its worth double checking.

OshayAway

Also, some - but not all - require that the individual insured file for bankruptcy.