Income Protection Insurance is one kind of insurance policy that can be bought in the UK.
Income Replacement Cover and Permanent Health Insurance are other names for Income Protection Insurance.
There are many different kinds of this type of policy, but in its simplest form, it is a policy that pays out money if the insured person can't work because of an accident or illness.
There are many insurance companies in the UK that offer Income Protection Insurance to both people who work for someone else and people who work for themselves. If you can't work because of an accident or illness, this kind of policy will pay out a portion of your income after a waiting period and until you go back to work, die, or retire.
Critical Illness Insurance is different from Income Protection Insurance because it usually gives you a lump sum if you are diagnosed with a critical illness.
Income Protection Insurance is especially helpful for people who are self-employed because if they get sick or hurt and can't work, their income often stops right away, while an employed person will usually continue to get paid for several weeks or months. So, a person who has a job wouldn't need the policy to pay out until they stopped getting paid by their employer, but people who work for themselves often need the policy to pay out more quickly. The cost of an Income Protection Insurance policy in the UK goes up the faster you need the money from the policy.
If you want your Income Protection Insurance to pay out until, say, 65 instead of 60, the cost will be higher.
In the UK, the cost of Income Protection Insurance depends on what you do for a living. For example, an electrician is statistically more likely to have an accident than, say, an accountant, so the electrician will pay a higher premium.
The premium for an Income Protection Insurance policy will depend on how much income the policy pays out. The more income the policy pays out, the higher the premium will be. You can only cover a certain amount of your income through insurance.
There are often a number of other options that need to be thought about, such as whether the premiums are fixed for the life of the policy or whether they can be changed after a certain number of years. Are there any situations where the policy won't pay out? For example, if you hurt yourself.
If you get sick or hurt and can't work, having Income Protection Insurance in the UK could make the difference between having a decent standard of living and having to rely on government benefits.
As with most insurances, it's up to you if you want to get this kind of cover.
