Long-term income protection is an insurance policy that is designed to cover you if you're unable to work due to injury or illness. It does not cover death which is usually catered for under separate life assurance policies.

Income protection usually pays out until retirement, death or your return to work, although short-term income protection policies are now available at a lower cost. Income protection doesn't pay out if you're made redundant, but will often provide 'back to work' help if you're off sick.

The maximum you can insure is usually around 50-60% of your earnings, as the provider needs to ensure there is an incentive for you to return to work. The good news is that claims are currently tax-free.

It is important to note that income protection policies only pay out once a pre-agreed period has passed (generally from 1 to 12 months after you claim). The longer the delay before you are able to claim, the lower your premiums.

Income protection is not the same as payment protection insurance (PPI)! PPI covers a particular debt and any payouts go to your lender, whereas income protection gives you the tax-free sum if you're unable to work due to illness or injury.

For more information speak to a mortgage protection adviser on 01628 507477 or contact us.

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