Illness or injury can stop your pay, but your bills will not stop. Income protection pays you a regular monthly amount while you cannot work, and as your protection advisor, BM14 Finance helps you find a plan that fits your life.
Income protection pays you a monthly income if you cannot work because of illness or injury. Think of it as a replacement salary. It starts after a waiting period that you pick, and it keeps paying until you go back to work, retire, the policy ends or you pass away, whichever comes first. You can use the money for rent or mortgages, food, bills and the kids’ costs, just like your normal pay.
It covers a long list of problems. These include illness, accidents, back and joint problems, cancer, heart conditions and mental health problems like stress, anxiety and depression. Some plans pay if you cannot do your own job, and some pay only if you cannot do any job, so this is worth checking before you buy. Most plans do not pay if you lose your job, unless you add separate cover for that. They may also leave out a health problem you already had before you started the policy.
You need it when your pay keeps your life running and nothing else would step in if it stopped. If you work for yourself, as a freelancer, contractor or company director, you usually get no sick pay at all, so income protection insurance for self employed people is often the only safety net. Even if you are an employee, check your contract. Statutory Sick Pay is only up to £123.25 a week, and it stops after 28 weeks. That is not much when the rent or mortgage is due. Other times you may need a plan are when you have a mortgage, when your family depends on your pay, when you start a new job with little sick pay, or when your savings would not last more than a few months.
How early should you apply? As early as you can, while you are healthy. The insurer checks your health when you apply, so a problem that shows up before you apply may be left out, cost more or lead to a refusal. If you wait until you feel ill, it is usually too late. It is like trying to buy house insurance after the fire. There is no fixed number of months, but your cover only starts after the insurer accepts you, and that can take a few weeks. Also pick your waiting period to match your sick pay and savings. If your employer pays full sick pay for three months, you can choose a longer wait and pay less each month. If you are self-employed, a shorter wait is usually safer.
We provide personalised advice based on your income, job security, and financial commitments. Our goal is to help you maintain financial stability if you’re unable to work.
Income protection is for people who earn a living and live in the UK. You can apply if you are working, whether you are employed or, depending on the insurer, self-employed. The insurer will look at your age, your health and your job. Now check if any of these sound like you:
If you match any of these, then yes, you definitely need income protection insurance. If you also have a mortgage, a mortgage and protection advisor at BM14 Finance can look at your home loan and your income protection together, so your monthly bills are covered if you cannot work.
Yes, absolutely. For most working people, it is one of the most valuable covers you can have. Here is why:
Income protection cover is an insurance plan that pays you a monthly income when illness or injury stops you from working. It covers short and long illnesses, accidents, cancer and other serious conditions, back and joint problems, and mental health problems. Most plans pay up to around 60% to 65% of your pay before tax, and the exact limit depends on the insurer. The payments start after your waiting period and carry on until you return to work, retire or the plan ends. It does not usually cover redundancy, and it may leave out health problems you had before you took the plan.
It depends on who pays the premiums. If you pay for your own policy, including if you are self-employed, the money you receive is tax-free. You do not pay income tax or National Insurance on it. If your employer pays for the policy through a group scheme, the payouts are usually taxed as pay and come to you through payroll. Tax rules can change, so check with your accountant or HMRC for your own case.
For most people, no. If you pay for a personal policy, you pay the premiums from your income after tax, and you cannot claim them back. This is also true for most sole traders, because HMRC sees it as a personal cost and not a business cost. Limited companies are different. A company can sometimes pay for income protection for its directors or staff and treat the cost as a business expense. But then any payout is usually taxed as income. So it is a trade-off between tax relief on the cost and tax-free payouts. Please speak to your accountant before you decide.
