Long term income protection insurance

What would you do if you found you were unable to work long term due to illness or injury? Would you and your family be able to survive financially on state provided benefits or your savings alone?

If you’re worried that the answer to this question is ‘no’ or you’ve never considered the question before, it may be worth exploring the protection provided by long term income protection insurance.


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You can call our team at Assured Futures for free on 0808 141 1245
(Mon – Thurs: 8.30am – 7pm, Fri: 8.30am – 5pm, Sat: 8.30 – noon)

The difference between short and long term protection

Short-term income protection policies, are sometimes known as Accident, Sickness and Unemployment products and usually only pay out for one or two years.

There are a number of different types of short term policies including Payment Protection Insurance and Mortgage Payment Protection Insurance. These provide cover against a specific debt, protecting you against payment defaults caused by an insured event.

Other forms can simply be used to cover short term money needs in the event that you lose your income due to incapacity.

In contrast, long term income protection will usually provide a regular income if you are unable to work due to illness or disability until you are well enough to return to work, or until the end of the policy term.

What does long term income protection cover?

If you take out a long term policy, what are you protected against?

  • Accident and Sickness

If you’re unable to work due to illness or injury your policy will cover a proportion of your income. Under some policies you can claim more than once. So for example if you were ill due to a shorter term medical condition, claimed and then recovered, only to become ill again, you could claim on the policy again. Conversely, if you were to suffer from a serious medical condition e.g. cancer or a permanent disability, this policy would pay you until you retire, become well enough to work again or pass away.

How would I make a claim?

  1. You’re forced to cease working for one of the reasons above.
  2. You make a claim with your insurance provider. This will usually need to include providing documents from your Doctor or former employer.
  3. The insurance provider will start to pay a monthly tax free benefit after you have been unable to work for the length of any deferred period set in your policy.
  4. The policy pays out until you either return to work or reach the maximum payout period set in the policy.
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Key considerations

With this type of long term policy, there are a number of things to consider, such as:

  • How long does the cover last?

The minimum term for most policies is usually 5 years with the maximum term taking you to the age of 70.

You might wish to set the policy length equal to the age at which you plan to retire. In that way you’ll have earnings cover in place for the rest of your working life.  

  • How much income can I cover?

This depends on how much you earn and the premium you choose. In many cases, the amount you can insure is set as a percentage of your pre-tax earnings. This can be up to 70% but could be lower if you’re a high earner.

Think about how much you want to protect. For example, as a minimum you’d want to cover your essential monthly outgoings, rental or mortgage payments, household bills, any debt obligations and then an allowance for every day spending.

  • What is a deferred period?

The deferred period is the period you’d have to wait before the policy kicks in and starts delivering benefit. It would make good sense to try and set this period equal to the length of time that your employer would pay you full sick pay should you have to go off work. This can vary significantly from employer to employer.

Something to note is the longer the deferred period, the lower your premium is likely to be.

  • Do all policies cover unemployment?

Although most long term income protection policies are designed to cover accident and sickness, some policies have an option to include some short term redundancy protection.

The insurance market is very competitive which means it’s a really good idea to compare policies and prices. You can call our team at Assured Futures on 0808 141 1245 (Mon – Thurs: 8.30am – 7pm, Fri: 8.30am – 5pm, Sat: 8.30 – noon) and one of their advisors will be able to guide you.