These policies are designed to replace your income if you are unable to work due to health reasons. There are 2 specific types of income protection;
These policies are 'off the shelf' and are not underwritten based on your current circumstances. You will generally have to confirm that you meet the criteria set out by the insurer at the time you take the policy. If you need to make a claim then you will be assessed at claims stage to make sure you did meet the entry requirements. These policies only provide cover for 12 or 24 months at which point the policy will cease. The policy is renewed on an annual basis so if your circumstances change you may not be able to renew the policy. Most policies will offer the option to cover against redundancy and will replace your income for up to 12 months.
Permanent Health Insurance policies are arranged over a set term, possibly to match the term of a loan or until retirement age. It is also underwritten at the time of application and therefore accepted based on your medical history. These policies offer far more comprehensive cover that an ASU policy as a claim will be paid until either you are able to return to work or the end of the policy term is reached, providing long term benefit.
There are other providers of Payment Protection Insurance [Short-Term Income Protection] and other products designed to protect you against loss of income. For impartial information about insurance, please visit the website at www.moneyadviceservice.org.uk
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