Teachers Income Protection provides you with a tax-free monthly income you can rely on should you suffer an accident, sickness and potentially forced unemployment.
It is designed to cover your core monthly financial commitments such as your:
- Mortgage/rent
- Utilities, council tax and other bills
- Food and other living costs.
Some teachers in the UK are fortunate enough to receive significant sick pay, which can be as much as 6 months of full sick pay and a further 6 months of half sick pay.
Before committing to an Income Protection policy and choosing your cover options, it is vital that you are aware of how much sick pay you are entitled to as it can greatly reduce the cost of your policy.
EXPERT OPINION 🤓
Income Protection is the one protection policy every working adult should consider. Which? Money
Do Teachers Need Income Protection?
It’s impossible to predict a bout of poor health, but should you ever face a serious illness or injury an Income Protection Insurance policy will cover a proportion of your income while you seek treatment and recover.
Government Support & Savings
Given Employment and Support Allowance can start as low as £90.50 assuming you’re over 25 and 2 in 5 people have £1,000 or less in savings, not everyone would be able to support themselves if they couldn’t work.
In the financial year ending 2017, average UK spending per household increased to £572.60 per week, which would be impossible to afford on benefits or savings alone. However, a Teacher’s Income Protection policy can pay out up to 70% of your income to help you cover your essential costs while you aren’t fit to work.
Education is amongst the top three industries that experience considerably higher rates of stress, depression and anxiety compared to the UK average. Stress in particular is a pervasive problem amongst teachers. In the 2016/17 academic year, according to the Liberal Democrats there were 3,750 teachers in England on long-term stress leave.
While some providers may exclude stress-related illnesses, others can cover teachers for any mental health problems provided they are not pre-existing. This means that if your mental health takes a turn during your career, your income may be protected by a Teacher Income Insurance policy while you seek the help you need.
Risk Of Serious Illness
Cancer, in addition, is becoming more of a common diagnosis, with Macmillan Cancer Support research suggesting that almost one in two people (47%) will be given a cancer diagnosis during their lifetime.
Treatment for cancer lasts for months or even years – far longer than a teacher’s sick pay entitlement may last – but a long-term Income Protection policy for teachers will ensure that they have a secure source of income during their recovery.
Applying for Teacher Income Protection Insurance is fairly simple once you know which policy options you want. You will need to select a level of cover, usually between 50% and 70% of your gross salary, and a length of cover that aligns closely to your financial needs.
Once you have confirmed the level of Income Protection you need you can compare Income Protection quotes to ensure that you are getting the best possible value for your money. In order to accurately compare quotes from insurers, you will need to provide the following information:
- Date of birth
- Occupation
- Current salary
- Basic information about your medical history
- Any dangerous hobbies or activities you take part in.
When comparing policies, the cost of Income Protection for teachers will depend on a range of factors, including the applicant’s age, health and smoker status as well as the policy options you choose.
Income Protection Policy Options
Choosing Your Level Of Cover
Typically, Income Protection Insurance for teachers can cover between 50% and 70% of your gross salary, although this will vary depending on the insurer you choose. While it may be tempting to opt for the highest level of cover available, the higher the level of cover you choose the more you will pay in premiums.
To avoid over-insuring yourself, it pays to take the time to look at your income and outgoings to see how much cover you actually need.
Choosing Your Length of Cover
One of the first and most significant options that you will be given with your policy is the choice between short-term and long-term cover.
- Short-term Income Protection pays out benefits for a limited time per claim. Per instance of incapacity you may be able to claim for a maximum of 1 to 5 years depending on your insurer. When you reach this limit and have claimed for the maximum amount of time, your monthly payments will stop, regardless of whether you are well enough to return to work.
- Long-term Income Protection offers comprehensive cover in that you can continue to claim benefits for an instance of incapacity until you reach retirement age. This means that if you develop a debilitating long-term illness or injury that prevents you from working, you can claim income for as long as you need to get back on your feet.
While the cost of these two types of cover can differ greatly, with long-term cover being more expensive, opting for a longer claim duration is the best way to ensure that your income is protected against long-term health problems.
Setting The Deferred Period
A Deferred Period is the length of time you agree to spend not working while incapacitated before you can begin to claim Income Protection benefits. Setting a longer deferred period can significantly reduce the cost of your policy.
Because you cannot claim Income Protection Insurance benefits while receiving income from elsewhere, a deferred period is usually set to align with policyholders’ sick pay entitlement. Because some teachers’ sick pay schemes work on a sliding scale, it can be difficult to work out the right deferred period for your policy.
Reducing your premiums by extending your deferred period
If you have enough savings to top up your income while you’re receiving reduced sick pay payments and perhaps last a few weeks more, you can benefit from drastically reduced premiums by setting a longer deferred period. However, if you don’t think your savings will go far enough, it may be best for you not to risk setting a longer deferred period if it will be difficult to keep up with your finances.
Indexation Option
Over time, inflation may erode the value of your monthly cover. For that reason, most insurers offer Index Linked Income Protection for Teachers which links the value of your insurance policy to the Retail Price Index (RPI). With this type of cover, your insurer will increase your insurance benefit to match any increases made to the RPI.
Type of Premiums
Different Premium Types will impact how the cost of your policy is affected over time and the process used by insurers to determine changes in cost.
- Level Guaranteed Premiums are fixed when you take out your Income Protection cover and they will not change for the entire life of your policy.
- Age-Banded Premiums will increase at a predictable rate each year to align with your added risk of claiming as you age. Your insurer will either increase your premiums by a fixed percentage per year or they will have a present ‘premiums table’ that they will use to determine by how much your premiums should increase.
- Reviewable Premiums are unpredictable and are reviewed on a regular basis and adjusted in accordance with your and your insurer’s circumstances. If you claim on your policy or if your insurer experiences a year with poor investment returns, there is a good chance that you’ll face increased premiums.
Own Occupation Income Protection for Teachers
Insurers have several different definitions of incapacity that they use to determine whether or not your health condition is severe enough for you to be considered ‘incapacitated’ and be entitled to benefits.
The most common definitions of incapacity found are Own Occupation, Suited Occupation, and Any Occupation. We always recommend that you choose an own occupation definition of incapacity. It ensures that you do not need to change occupations if you are not well enough to work.
Own Occupation
The own occupation definition of incapacity means that your insurer will consider you sufficiently incapacitated and incapable of working as long as your injury or illness prevents you specifically from working in your own occupation.
For example, as a teacher it is vital that you are able to use your voice to effectively communicate with your students. Because of this, your insurer may approve your claim if you develop an injury or illness that prevents you from using your voice.
Suited Occupation
The suited occupation definition, on the other hand, will not pay out if you are capable of working in a similar occupation that you are qualified for. For example, while an esophageal complication may prevent you from teaching, it may not prevent you from working as a classroom assistant, therefore your claim for incapacity would not be approved.
The main issue with a suited occupation definition of incapacity is that judging the severity of your incapacity and what defines a suitable occupation can be subjective, potentially making it difficult to claim.
Any Occupation
The worst definition of all to have on your policy is any occupation, which prevents you from claiming on your policy unless you are completely incapable of working in any occupation at all. This doesn’t have to be even remotely suited to your skillset as a teacher.
How To Make A Claim?
Income Protection for teachers provides a monthly benefit to cover a proportion of your pre-tax income. The length of time a policy will pay out for per claim depends on whether you choose a short-term or long-term policy
Long term policies are designed to protect you up to your expected retirement age where a short term policy may only pay a claim for a maximum of 2 years.
- Step 1 :: You sustain an injury or develop an illness that is severe enough to prevent you from working.
- Step 2 :: You receive a diagnosis of your condition from your GP or a specialist.
- Step 3 :: As soon as possible, you contact your insurer’s claims team and provide the information and documentation required to make a claim. This may include a completed claims form, a note from your GP, and evidence of your current salary prior to taking leave from work.
- Step 4 :: Provided your claim is approved, after the end of your deferred period you will begin receiving Income Protection payouts.
- Step 5 :: You can continue receiving insurance benefits until either: you reach the maximum claim duration, you are well enough to return to work, or until you reach retirement age. This will depend on your policy’s terms.
Neil’s Cancer Claim With British Friendly
Neil is a client of Drewberry and took out an Accident and Sickness Insurance policy with British Friendly. He was a member for 4 years before he needed to claim.
He became unwell and had pains in his stomach. After consulting his GP and having some further tests Neil was diagnosed with stage 2 Bowel Cancer and needed to make a claim.
🤕 Read More About Neil’s Claim
Does Teacher Income Protection cover stress?
As a teacher, it’s essential you take out the right policy. This is because educators are more prone to mental health problems and stress than the general population and so some providers may exclude stress-related illnesses from the policy.
Others may not recognise stress as a medical condition even though it can easily sign you off work.
We’ll work with you to find the most inclusive policy for your role as a teacher to ensure you’re covered for all eventualities possible given your state of health at the outset of the policy. This will include potentially favouring insurers that put teachers in a lower risk class than some of their competitors.
Will Income Protection work with my Teacher sick pay?
As with many state workers, teachers tend to get more generous sick pay than those in the private sector.
At its most generous, teacher sick pay will provide up to 6 months of full pay and 6 months of half pay. This means your deferral period for Income Protection can be extended, reducing the cost of the policy.
Teacher Income Protection policies can come with what’s known as a ‘split deferred period’, which means they’ll work with the length and amount of sick pay you receive from the government.
If you get the full 6 months of full sick pay and 6 months of half pay, then your Income Protection policy will kick in after 6 months to top up the half pay you’re receiving. It will then start paying out the full benefit once the full 12 months of sick pay is over.
Does Income Protection cover permanent disability?
Yes, if you choose long-term Income Protection it will continue to pay out for as long as you need it, right up until retirement if necessary if you become so ill / disabled you can never work again.
At retirement, you can then move to relying on other vehicles, such as pensions, to live on.
What is the maximum Income Protection benefit?
The maximum Income Protection benefit depends on the insurer. You can typically insure between 50% and 70% of your gross income with Income Protection depending on the insurer you opt for.
Get Teachers Income Protection Quotes & Expert Advice
Although the UK insurance industry has made huge strides over recent years in simplifying its language and processes of applying for Income Protection, it has to be admitted that selecting an appropriate policy can still sometimes be a little complex.
Given the value and importance of this type of sick pay insurance for teachers, it is best to take precautions when applying for policies and avoid confusing your options by speaking to an expert.
Why Speak to Us?
We started Drewberry™ because we were tired of being treated like a number.
We all deserve a first class service when it comes to issues as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.
If you need some help navigating the minefield then please do not hesitate to pop us a call on 02084327333 or email help@drewberry.co.uk.
