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What is long term income protection?

Long term income protection insurance can be a great way to avoid financial difficulty if you were unable to work due to injury or illness.

Most sick pay schemes will only pay out for a limited time and income protection can work as an additional safety net for you and your loved ones. It is important to choose the type of income protection policy carefully, as there are several available options.

Long term income protection can be very useful if you were left unable to work for very extended periods of time e.g. after a serious accident or due to illnesses such as Parkinson’s disease or multiple sclerosis. These policies can pay out for years at a time – right up to retirement!

In this guide, we will explain more about long term income protection, how these policies work and the pros and cons you need to think about.

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YES – long term income protection policies are available with many of the UK’s top insurance providers. This means there is a great variety of choice and varying levels of cover to suit you.

You can apply for long term income protection if:

  • You are over 18 years old
  • You are a UK resident
  • Are employed (either by an employer or SELF EMPLOYED)

How does long term income protection insurance work?

Long term income protection works by paying out a set monthly income to you (covering around 50%-70% of your usual income). You can claim if you are unable to work due to an illness or injury. You will need to be signed off work by a doctor or GP for 4 weeks or longer for a valid claim.

The main benefit to this policy compared to other forms of income protection is that it will pay out for a far longer amount of time. Most income protection policies will pay out for 2 years at most.

Long term income protection can pay out for the entire term of the policy if needed which means:

  • You can receive payments every month for years at a time e.g. if you claim with 10 years left on your policy, you can claim for the full 10 years
  • You can claim until you either return to work again, the claim period expires, or you retire (if you have set your policy to end at retirement age)

YES – insurance providers will underwrite income protection policies in the same way they do with other policies like life insurance and critical illness cover.

This means it is possible to get cover with medical conditions, provided you speak to the right insurer who is understanding of your medical history. If you have a more serious pre-existing condition, it can be worth speaking to an income protection expert for extra advice and support.

As the UK’s TOP RATED income protection specialists, we have helped hundreds of people find the cover they need with conditions including:

YES – income protection insurance can be very helpful for people who are self-employed. People who are self-employed won’t generally have access to workplace sickness schemes or Statutory Sick Pay (SSP).

Income protection can offer some peace of mind that you won’t fall into debt or financial difficulty if your health prevents you from working. Long term cover can provide even more of a safety net, as you can claim for as long as needed (can be for many years at a time e.g. 10 years).

When you apply you will be asked the same questions as a person who works for an employer. You will just also need to confirm your income to the insurer using recent accounts or an accountants reference.

When you apply you will need to think about:

  • Your usual income (as this figure can vary just estimate an average, insurers will be able to take this into account)
  • What do you need to cover? (e.g. mortgage, rent, utility bills etc)
  • Do you have dependents who rely on your income? (this can be adults or children)

You may not be certain of the level of cover you need, or which insurer will be best for you. Our income protection EXPERTS can provide FREE advice and guidance, to help you choose the right policy to suit your budget.

How much does long term income protection insurance cost?

One thing to note about long term income protection insurance is that is generally the most expensive form of income protection. This is because it is the most extensive cover available and so you will need to pay a little extra because of this.

You may still find that your cover can be very reasonably priced, with a little research and support from an income protection specialist. There are several factors that can affect how much you end up paying for your policy including:

  • How much cover you need (£s) – how much your monthly claim pay outs will be
  • How long you want to be covered for (length of policy term, you can cover yourself for a set period of time or right up until retirement age)
  • If you have any medical conditions (can make you more likely to claim)
  • Any high risk hobbies e.g. skydiving
  • If you have a dangerous occupation
  • Smoker status
  • Your age
  • The deferred period for your policy (how long between claiming and receiving the first monthly payment)

You will be covered for any illness or injury that means you cannot work for 4 or more weeks (if a doctor or GP signs you off work).

Sometimes the insurer will place an exclusion on certain pre-existing conditions or high risk activities, if they believe you are more likely to claim because of them. You wouldn’t be able to claim for sick leave related to these reasons but would still be able to claim for a wide variety of other medical conditions and injuries.

When you need to claim you will need to:

  • Contact your insurance provider
  • Complete a claim form (usually online)
  • Submit medical evidence (if needed)
  • Submit financial evidence (if needed)

The main choices for income protection insurance are short term or long term policies – and which one is right for you can vary. These policies are similar in some ways but have a few important differences. Below we have the main facts about each policy type:

Short term income protectionLong term income protection
Will allow you to claim for between 12 months to 24 months at mostCan allow you to claim for many years, right up until retirement age if needed
Most providers will allow you to claim more than once (even for the same condition)Most providers will allow you to claim more than once (even for the same condition)
Will stop paying out as soon as you return to work or your claim period ends (usually 2 years at most)Will pay out until the end of the policy term (could be as many as 5 years, 10 years etc) or you return to working as normal
Will cost less than long term income protection in most casesCan be more expensive due to cover being more extensive and paying out for longer

There are few pros and cons to think about before buying long term income protection insurance.

Financial support for when you cannot work due to injury or illness with flexible levels of cover (can tailor cover to your budget)Can cost more for your cover if you are older, have a medical condition or high risk job/hobby
Can pay out for far longer than short term policies (you can claim for many years at a time, up until you retire with some policies)There will normally be a waiting (deferred) period between claiming and receiving your first payment
Provides you with regular tax-free payments to help replace lost income (covers between 50%-70% of your usual pre-tax income)You may have some things the insurer will not allow you claim for (exclusions) e.g. claiming for sick leave related to a pre-existing medical condition
Pays out for most illnesses/ injuries (anything that causes you to be signed off work for 4 or more weeks)Can be more expensive than short term policies, as they insurer will allow you to claim for longer

Everyone will have different needs and budgets for their income protection cover, meaning which policy is ‘best’ can vary massively from person to person. It is a good idea to think about how much you can afford to pay and what you need to cover (mortgage, bills etc) before deciding on a policy.

There are a few different options for income protection insurance, so you can choose the policy that feels like the best fit for you. There is:

  • Short term income protection insurance: this will normally pay out for between 12-24 months to support you if you cannot work due to illness or injury
  • Long term income protection insurance: can pay out over many years (up to retirement age) to help support you if very long term illness or injury prevents you from working
  • Personal accident insurance: will onlypay out for accidental injuries (e.g. a car accident), providing funds to help support you during your recovery
  • Guaranteed sick pay: usually does not require any medical questioning and can provide a monthly income for up to 12 months

If you need some more advice or information about income protection insurance, you can speak to one of our friendly insurance EXPERTS. Our teams has years of expertise with income protection insurance and can help you compare hundreds of available policies.

This can allow you to rest easily knowing the cover you put in place will offer the level of protection you need at the BEST price available.

Useful resources

Safe Workers – Average sick days in the UK 2022 

Statista – Sickness absence rate in the UK 1995-2021 

Citizen’s Advice – Check if you can get sick pay 

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Is it worth having income protection insurance?

Income protection insurance can be extremely useful and very important for anyone who is unable to work due to sickness or an injury (e.g. from an accident, sports, work etc.). Essentially, income protection insurance pays out monthly to replace any lost earnings while you are unfit or unable to work.

Payments for income protection insurance can be used to pay your mortgage, rent, other credit commitments, food bills, utilities and other regular outgoings.

Common myths about income protection insurance:

  • Income Protection Insurance won’t pay out
  • Statutory Sick Pay (SSP) from the government will cover me
  • The cost of Income Protection Insurance is high
  • People with medical conditions can't have Income Protection Insurance
  • My employer will help support me
What does income protection insurance cover?

As a rule of thumb, income protection insurance will pay out a regular monthly tax-free payment to you if you can’t work and you are signed off by a doctor. You will need to provide supporting evidence from a medical professional such as your GP and proof of income from your employer or accountant.

Example: Sarah was involved in a car accident which resulted in a serious back and neck injury that prevented her from being able to drive for 6 months. She was able to claim on her income protection policy after 4 week for the remaining 5 months until she was able to move and drive again. She would also usually be able to claim for rehabilitation and physiotherapy to help her to return to work as planned.

Do I need income protection insurance for a mortgage?

Income protection insurance and mortgage life insurance are not compulsory for getting a mortgage in the United Kingdom. Some mortgage lenders might ask for you to get insurance as a condition of the mortgage offer in some circumstances but this is rare.

It is strongly recommended to have insurance to protect you and your family if you have a mortgage and other credit commitments. If you consider what the financial impact would be if you were unable to work due to accident, sickness or injury, and even if you were to die.

Most common mortgage protection insurance policies:

  • Buildings insurance
  • Mortgage life insurance
  • Income protection insurance
  • Critical illness insurance
  • Mortgage payment protection insurance (Accident, Sickness & Redundancy
Is income protection insurance tax free?

Payments from an income protection insurance claim are almost always tax-free, apart from some business income protection policies. This is because you pay tax on the premiums for personal income protection insurance at source (i.e. the premiums are paid from your net monthly salary).

The same applies to life insurance premiums and payouts, effectively you have already paid tax on the premiums that you have paid. There are some other possible tax implications that may apply in certain circumstances so you should seek proper advice or guidance if you have any specific questions.

Which is the best income protection insurance UK?

It’s very difficult to say overall which income protection insurance policies or providers are the best, simply because there are so many different options and types of cover. You can get income protection insurance from an even wider range of insurance providers than life insurance, so your choice is even greater.

The most common income protection insurance policy is:

  • Short term income protection insurance (24 months)
  • 4-week deferred period (pays out after 1 month of absence)
  • Guaranteed premiums (fixed premiums)
  • Underwritten income protection insurance

There are several other cover options for income protection insurance (e.g. long-term, age rated, reviewable premiums, guaranteed acceptance and 0 weeks to 12 months deferred periods).

The top 5 income protection insurance providers according to research by Defaqto are:

  1. Aviva (Trustpilot score: 4.0 out of 5.0)
  2. British Friendly Society (Trustpilot score: 4.1 out of 5.0)
  3. LV= (Trustpilot score: 4.5 out of 5.0)
  4. Royal London (Trustpilot score: 4.0 out of 5.0)
  5. Shepherds Friendly (Trustpilot score: 4.3 out of 5.0)
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At iaminsured.co.uk, we believe in much more than just insurance policies; we believe that everyone is unique and should be treated with the fairness that they deserve. We also believe in providing the very best financial protection, and giving you peace of mind to continue with your busy life without the stress or worry of what might happen.

We are dedicated to providing the best outcomes that we can and access to the best insurance solutions in the way that our customers want or need. We understand that everyone is totally unique in how they want things done and their own individual circumstances, which is where our totally unique approach to financial protection is driven from.

  • 100% online protection solutions
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With nearly three decades of expertise and established with a commitment to excellence in everything that we do. We have been a trusted partner for thousands of families, individuals and businesses, all with one common goal of looking for the best protection solutions.

Our Mission: To provide easy access to fair pricing, affordable protection and the very best financial security to families and individuals. We are dedicated to offering comprehensive insurance solutions that safeguard the well-being of our policyholders. Guided by integrity, transparency, and a commitment to excellence, we strive to empower consumers and families to face the future with confidence. Our mission is not just about policies; it's about protecting dreams, ensuring legacies, and being a trusted partner on life's journey.

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