Ross Stisi, our Bearded Broker, is here with a Two Minute Taster video to tell you about Income Protection Insurance.

Income Protection Insurance – it’s something that we’re being asked about a lot just now. But, do you know what it is, and more importantly, if you need it?

In this Two Minute Taster video our MD Ross Stisi gives you the basics, so you can make an informed decision. Take a look, and then see below for some key points.

Income Protection is absolutely the most important insurance that you should have.

Everything that you pay for every single month out of your bank account is underpinned by the income going into it in the first place.

Ross Stisi – Stisi Group Managing Director

Income Protection Insurance – at a glance

What is income protection insurance and who can apply?

• This insurance provides regular monthly payments if you’re unable to work due to illness, injury or disability

• Policies are typically over a long term, with payments usually made until either your return to work, retirement or – if before retirement age – death. Some providers do offer shorter term policies; these have a term of one or two years and have lower premiums.

• Anyone over the age of 18 who is working for an income can apply for income protection insurance. Providers do not usually accept applications beyond retirement age.

How much does it cost – and how much will it pay out?

• Premiums are determined by numerous elements particular to the individual applicant and to the details of their policy. These include personal factors and your job or type of work.

• Payments will generally be 50% to 70% of your gross salary. Some providers offer policies which offer a higher percentage on a set amount of your earnings and lower percentage on the remainder.

• Payments from an income protection policy are income tax free, however policy payments may affect any benefits that are calculated on your regular income.

• Index-linked income protection insurance policies rise each year with a measure of inflation – this could be the retail prices index (RPI) or consumer prices index (CPI). This is worth considering, as any payments you receive will be a percentage of your income at the time of taking out the policy.

When will a policy pay out?

• Income protection insurance covers most illnesses or injuries that leave you unable to work. Make sure to check for any exceptions when comparing policies, particularly if you are looking for cover for COVID-19 or an injury specific to your type of work.

• All policies have a deferral period. This is usually either 4,8,13 or 26 weeks but can be as long as two years after you have submitted your claim to your insurer. The minimum period is four weeks. The longer the deferral period, the lower your premiums.

• How your insurance provider defines your inability to work will determine if your policy pays out, and when this will be. It’s important to consider this when comparing policies.

• There’s no cap on the number of times you can claim, as long as the policy is still in force. If you reach the end of your policy there is no pay-out, and it’s not possible to cash-in your policy at any time either.

Is income protection insurance the same as PPI or Critical Illness Cover?

No, these are three different types of insurance.

Is it really worth it?

Now you’ve watched the video and know the key points, take a look at our blog for an in-depth view. We ask – Income Protection Insurance: Is it really worth it?

We believe it’s really important to look for professional advice to work out which type of income protection is right for you and your needs. A financial adviser will be able to listen to you, help you determine the level and type of cover that is most appropriate for you, and then provide quotes from across the market.

Stisi Group are here to help

Our team at Stisi Group are friendly and professional, and trusted protection experts – get in touch if you’d like to ask any questions, chat through the options available to you or book a free appointment. You can call us on 0131 510 1240 or email [email protected].

You can see all of Ross’s video guides on our YouTube channel – be sure to subscribe!