Income Protection and Redundancy Insurance
Insuring your future
Income protection insurance (IPI) is designed to assist the customer in the event that they are rendered unable to work, due to illness or incapacity.
If you find yourself unable to work due to a long term illness, you could find it very difficult to keep your head above water.
Likewise if you suffer a serious accident – a serious accident that incapacitates you could make you a candidate for claiming personal injury compensation, but if you aren’t in a position to claim compensation, you could find things very difficult indeed.
Other insurance policies for this type of situation are available – for example, if you have a loan or a mortgage which you would struggle to cover when your income dries up, a payment protection insurance (PPI) policy would be more appropriate.
The potential for usefulness of an income protection insurance policy will depend entirely on your circumstances.
Do you need Income Protection Insurance?
When asking yourself this question, consider not how healthy you are, or how likely you are to get injured – consider how you would support yourself and your family if you were unable to work.
After all, an injury, accident or illness could befall anyone at any time. It’s estimated that 2.2 million people will be off work for at least six months as a result of sickness or injury.
Ask yourself these questions to determine whether or not you need income protection insurance:
- If you were to fall sick and you live with your partner, would your partner’s income be able to cover the living expenses of the two of you indefinitely, as well as the living expenses of any children or other dependants?
- If not, or if you don’t live with a partner, do you have enough money saved up to cover your cost of living if you were to fall ill for an extended period of time?
- Would your employer continue to pay you sick pay beyond the 28 week period for which they are legally obliged?
Unless you can answer “yes” to at least one of these questions, we recommend that you look into income protection insurance.
Cover from your employer
If you are an employee rather than a worker (and the distinction between a worker and an employee is an important one) your employer is legally obliged to provide you with Statutory Sick Pay (SSP) for at least 28 weeks.
After this initial period has elapsed, your employer is not obliged to keep paying you, although some employers will pay you a percentage of your standard working wage beyond this period.
You may even find that your employer has income protection insurance policies in place for their employees, and you automatically receive cover without needing to buy your own policy.
Check with your employer to see what you would be entitled to when you fall sick, before seeking your own income protection insurance.
Income Protection Insurance for unpaid workers
Income protection insurance isn’t just invaluable for paid workers and employees – if you work in a non-paid capacity, you should consider how illness or injury could prevent you from carrying out your duties, and how this could affect anyone relying on you.
For instance, you could be working as a full-time carer for an elderly family member. If you were to fall too sick to work, you or the person depending on you may need to hire someone to maintain their care whilst you recover.
Certain income protection insurance policies will provide cover for these circumstances. However, not all income protection insurance will cover unpaid workers, and you should always check the details and intricacies of any insurance policy before you purchase it.
Share your experiences
Please note: The views expressed in community areas of this site do not necessarily reflect or represent the views of Law on the Web, its owners, its staff or contributors.
Redundancy is a form of dismissal from employment. Redundancy is relevant when the dismissal concerns reasons that are not related to the individual.Find out more
As employment law is a complex area of many rules and regulations it can be a lot to take in. Without these rules and regulations in place many employees could find that their rights are being abused.Find out more
TUPE stands for the Transfer of Undertakings (Protection of Employment) Regulations and is often referred as TUPE. This is a type of employment law.Find out more