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What is short term income protection?

Income protection can be a very useful policy to provide yourself and your family with extra financial security. These insurance policies will pay you a tax-free monthly income if you cannot work for an extended time due to injury or illness.

There are various benefits to choosing short term income protection, the lower cost compared to long term income protection policies being the main one. Which type of cover is right for you will usually come down to personal choice and budget.

In this guide, we will explain everything you need to know about short term income protection insurance and how it can offer you vital financial support at a difficult time.

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YES – short term income protection insurance will be easily available for most people. Income protection is sold by most of the UK’s top insurance providers and so there are a lot of great options for short term cover.

You will be able to apply for short term income protection if:

  • You are aged 18 or older
  • You are a UK resident
  • Are employed (either by an employer or SELF EMPLOYED)

How does short term income protection insurance work?

This form of income protection will pay out a monthly income equal to between 50%-70% of your usual pre-tax income for a set period of time.

Can I get short term income protection insurance with a medical condition?

YES – most providers will be able to offer income protection policies to people with medical conditions, as they are underwritten in the same way as other insurance policies.

People with more serious medical conditions can find it harder to get the cover they need sometimes, as not all insurers view medical conditions in the same way. The key to getting the cover you need at the right price is knowing which providers will work best for your own medical history.

As EXPERTS in pre-existing conditions income protection, we have helped many people find the cover they need with conditions such as:

YES – self-employed people are just as able to get income protection insurance as anyone else. In fact, it can be even more important to consider getting income protection if you are self employed, as you will not be able to access support such as Statutory Sick Pay (SSP).

The application process will be the same for the most part. You will just need to prove your income through your most recent accounts or a reference from your accountant.

When applying you will need to consider:

  • Your average income (this can vary, but don’t worry most providers can take this into account)
  • What you need to cover (e.g. mortgage, rent, utility bills etc)
  • What you want to be covered for (e.g. just accidents, illness and injury or you can occasionally get accident, sickness and unemployment cover)
  • If you have dependents who rely on your income (either adults or children)

If you’re not sure how much cover you need or which insurer is your best option, our EXPERTS can offer free and friendly advice and support with your application.

How much does short term income protection insurance cost?

An advantage of short term income protection insurance is that it can offer great cover while being more cost effective than a long term income protection policy.

There are various things that can affect how much you will pay for your policy including:

  • The amount of cover you need (how much you want your monthly claim payments to be)
  • The length of policy term (how long you want to be covered for)
  • Any medical conditions you have
  • If you have a high-risk job or dangerous hobby
  • Smoker status
  • Your age
  • The policy deferred period (the waiting period between claiming and your first payout)

If you have a short term income protection policy, you will be covered for any illness or injury that prevents you from working for 4 or more weeks. You will need to be signed off work by a GP or other doctor to be able to claim.

When you need to claim you simply:

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

Sometimes you might have an exclusion applied to your policy. This is when a provider states they will not pay out for a specific reason when your policy is set up. An exclusion will usually be something like a risky activity/hobby or a pre-existing medical condition.

Short term vs long term income protection

Short term and long term income protection are similar in some ways – but there are some key differences to think about. Below we are highlighting the main features of both policies to help you decide which may be a better fit for you.

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

As with any insurance policy, there are pros and cons of income protection insurance. Here we are covering the pros and cons of short term income protection insurance specifically.

ProsCons
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
Costs less than long term income protection (in most cases)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)Does not pay out for as long as long term cover (pays out for 12 or 24 months maximum with most policies)

Your best choice for income protection insurance will be a very personal decision and depends on your own circumstances. You need to assess how much cover you need and how much you can afford to pay before making any decisions.

You may not have realised there are several types of income protection cover you can choose from. There is:

  • Short term income protection insurance: pays out for 12 months to 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) to support you if you cannot work due to very long term illness or injury
  • Personal accident insurance: pays out for accidental injuries (e.g. a car accident) to support you as you recover whether at home or in hospital
  • Guaranteed sick pay: usually does not require any medical questioning and can provide a monthly income for up to 12 months

Another good option can be CRITICAL ILLNESS COVER. A critical illness insurance policy works similarly to income protection but pays out one cash lump sum on diagnosis of a serious medical condition.

If you need more information about income protection, you can speak to one of our income protection EXPERTS. Our team can offer FREE and FRIENDLY advice, so you can feel confident you are choosing the right policy for your needs – and at the BEST possible price.

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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Our Mission

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
  • Top rated advice from the UK’s leading experts
  • Unique specialist protection services for all medical conditions, occupations and activities
  • Lowest prices and affordable cover options guaranteed
  • Dedicated to providing the best protection products for all your needs

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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