What is it?
A policy that provides a regular income
if you are unable to work because of sickness or disability.
Why do you need it?
Income Protection should be considered
if you would not be able to maintain your standard of living
on State Benefits alone.
If your regular outgoings are normally
met from income, then taking away that income can have drastic
and wide ranging implications including inability to meet
mortgage and loan payments, as well as basic household bills
and living costs.
Plans are available for employees,
self-employed people and even those who do not work but are
responsible for managing a home.
Things to bear in mind
When taking a policy out you can normally
set it up in a variety of ways – each will pay out in
a different way and therefore has an effect on the monthly
premium. The different criteria include:
* Occupation definition
* Deferred period
* Guaranteed or Reviewable premiums
* Increasing or level benefits
It is important to ensure you take out the policy that best
suits your circumstances, NOT the one that provides the cheapest
premium!
Accident, Sickness & Unemployment Cover (ASU)
What is it?
A policy that provides a tax-free monthly
income if you are unable to work as a result of medium term
sickness, incapacity or unemployment (normally 30 days or
more)
Why do you need it?
Many people make the mistake of thinking
that should they fall ill, have an accident or lose the ability
to work,the State will step in and sort it all out. Wrong
- the rules governing sickness benefit claims have changed
dramatically.
Before April 1995, you could qualify
for long-term sickness benefit if you were rendered incapable,
by illness or disability, of doing your own job of work. Now
the rules state that you will only qualify for long-term sickness
benefit if you cannot do any job of work. In other words,
only if you are completely incapacitated will the State pay
you any benefits. This means that, to all intents and purposes,
there are currently no long-term sickness benefits in the
UK.
Even if you do qualify for getting
long-term sickness benefit from the State - and it’s
currently around only £66 a week - that benefit is now
taxed.
Things to bear in mind
This policy is similar to Permanent
Health Insurance (PHI) with two main exceptions:
* Unemployment cover
can be included
* The policy normally only pays out for a
specific period (e.g. 1 or 2 years)
|
