Income Protection

Sick pay is provided by either your employer, or the state (statutory sick pay if you are eligible). Statutory sick pay is currently £116.75 per week and is paid out for 28 weeks. Income protection is a policy you pay for and if a claim is made the insurance company pays out.

It's important to understand how long your employer would provide sick pay for if you are unable to work as this will dictate the length of your waiting period if you were to take out income protection.

Another type of policy available is called personal sick pay insurance. These policies are the same as income protection policies, however the premiums are age costed, meaning that the monthly premium increases as you get older.

When you have been unable to work due to sickness or injury for longer than the waiting period on your policy. It doesn't matter what it is that makes you unable to work, (unless your policy has pre-existing exclusions). If you are medically unable to do your job, then you should receive a payout. Most income protection policies are set up based on your own occupation. So, if you are unable to do your job, then it pays out.

This depends on your individual circumstances. Here are 3 factors to consider to help you decide:

• Would you be able to cover your outgoings on statutory sick pay once your employer stops paying you, if you were unable to work?
• Would you be able to maintain your lifestyle if your income was to stop due to illness?
• Do you have savings that you would be happy to draw on if you were unable to work?

If the answer to any of the above questions is no, then you should consider taking out some income protection.