INCOME PROTECTION

There are three main types of income protection cover. They are:

• Own occupation – will pay out if you are unable to do your own occupation.
• Suited occupation – will pay out if you are unable to do your own or other occupations which suit your experience or qualifications.
• Any occupation – will pay out if you are unable to do any work at all.

The policy will pay out either until you are able to return to work, or until the end of the policy (whichever is sooner). The length of the policy is up to you, and will depend on your personal situation. You may wish to cover your income until retirement age, until the end of your mortgage payments or until your children are no longer dependent. Generally, the longer the policy the more expensive the income protection insurance is.

If you meet the criteria for a pay out, your income protection insurance will start paying out at the end of your deferred period. The deferred period is normally between 1 and 12 months, but will depend on your circumstances. If you have significant savings and can afford to support your family for a while, then you may wish to choose a longer deferred period. This is likely to bring the policy price down but you will wait longer for the pay out to begin, so make sure you choose a deferred period which is right for you.