What it does. Income protection insurance pays out a regular tax-free replacement income if you become unable to work because of illness, injury or – with certain policies – unemployment. It could help you keep up with your mortgage repayments or rent, and other day-to-day living costs until you are able to return to work.  

 

You can buy cover that will pay you a monthly income either until your planned retirement age, or for a limited amount of time. When you become unable to work due to an illness or injury covered in the policy, and make a claim, most policies will have a deferred period before payments start to be made. The premium you’ll pay will vary depending on these factors and others such as your age, health, the nature of your job and, of course, the level of income you wish to protect.

Why you might need it. If you become ill or suffer an injury during your working life, an income protection policy can help protect against any possible loss of income.