Who Needs Income Protection Insurance?

Many employees have worked for their employer for 20 or 30 years or even more. If they are made redundant then they can expect to receive the equivalent of 2 or 3 years wages. Some employees such as soldiers and some police officers and many private sector personnel also get full sickpay for a year or even more. This kind of person wouldn’t normally need income protection insurance as their income would remain the same whether they are suffering from an accident or sickness or have been made unemployed through a redundancy.

On the other hand the majority of people have very limited sick pay, such as a month full and then statutory sick pay. Most people have only worked for their employer for a year or two and thus they have a real need for income protection insurance due to limited redundancy pay. In addition self employed people are normally the most vulnerable when it comes to this type of insurance.

Income protection insurance will pay normally a maximum of 70% of your normal salary. It kicks in after a deferment period which is chosen at the outset. If a person receives full sick pay for 3 months then they may choose a 3 month waiting period.