Types of Salary Insurance

Many employers no longer offer additional sick pay benefits and there are an increasing number of us going self-employed, which means that we face a higher risk of substantial financial loss if we are unable to work. 1 in 10 people have been unable to work due to illness or injury for over 6 months(Guardian / Unum Survey 2011).

Salary protection insurance pays out if you are unable to work due to accident or sickness and sometimes unemployment, which means you wouldn’t need to rely on statutory sick pay or unemployment benefits.

Your Salary Protection Options

Long term income protection insurance

Your most comprehensive option…

Formerly known as permanent health insurance, a long term insurance policy pays out if you are unable to work due to accident or sickness. The length of the payout period can be set up to retirement age, covering you for that entire period.

The payments are tax free and cover up to 70% of your earnings. The plans pay out after an agreed period of time known as the deferred period. This can range from one day to one year. The average length of an income protection claim with LV in 2012 was 7 years, which shows that it is worth considering a long term income protection plan.

Premiums can be guaranteed with this type of insurance so that you know in advance what you will be paying each year.

Short term income protection insurance

The budget option…

Structured the same as a long term policy a short term income protection plan may be better suited for those on a budget where long term cover maybe unaffordable.
It can offer the same comprehensive sickness cover protecting you in your ‘own occupation’ however should a claim arise the the policy would only pay a claim for a maximum of two consecutive years.

Of course, a shorter term plan poses the risk that you will not be covered should you be unable to return to work after the payout period. However, some cover is better than no cover and this is a viable option for anyone with a limited budget.

Accident Sickness and Unemployment Cover

The alternative…

It is important to note accident, sickness and unemployment (ASU) policies are different to traditional long term income protection policies, they are short term policies paying a claim for a maximum of 12 or 24 months.

The most important consideration when choosing your salary protection is the occupation definition the insurer uses to assess a claim.

Most long term policies will cover you in your ‘Own Occupation’ paying a claim should you be unable to do your current job role. However many ASU policies will only cover you in a ‘Suited Occupation’, only paying a claim if you are unable to do your own job role or another you maybe suited to based on your experience and education.

This is why it is vital you speak to an expert or at least read all the fine print when it comes to making a decision on how best to protect your salary.

If you are a part time worker, self employed or on a temporary contract then the unemployment cover might not cover you so it would be wise to speak to an independent adviser first.

Unemployment Cover

Unemployment insurance is a short term benefit which pays out if you have been made redundant or in some cases dismissed. Most insurers will allow you to cover up to 65% of your earnings or £2,500 per month (which ever amount is less). Plans can pay out for a maximum of 12 or 24 months.

We would only recommend unemployment cover for those that are employed however it can be difficult for self employed people to claim on this type of policy.

Getting Income Protection Advice

At Drewberry, we offer free and impartial Income Protection advice, helping to pair you with the right protection to meet your needs.

If you’re interested in taking out Income Protection, our advisers will help you find one that suits your needs. We have access to the entire UK market, so are well-suited to search out the right policy for you.

Why Speak to Us…

We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.

• There is no fee for our service
• We are independent and impartial
  Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
• We’ve got bargaining power on our side
  This allows us to negotiate better premiums for you than you going direct yourself.
• You’ll speak to a dedicated expert from start to finish
  You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
• Benefit from our 5-star service
  We pride ourselves on providing a 5-star service, as can be seen from our 3900 and growing independent client reviews rating us at 4.92 / 5.
• Gain the protection of regulated advice
  You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
• Claims support when you need it the most
  You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.