Jargon Buster - Definition of Income Protection

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Income Protection

is a long term accident and sickness policy that pays out a monthly income to the insured if he/she is unable to work for a specified number of days, also known as the deferment period. Income Protection can be set to pay out until retirement age if necessary, which is an effective method of protecting income whilst working.

Income Protection is available for both employed and self-employed. It can also be available for contract workers, however it is strongly recommended that you seek advice for the latter.

Most providers will only cover 50%-65% of your gross income due to current laws, however the benefit is paid free of tax.

Income Protection Policies are underwritten, meaning that your premium depends on age, gender, health, lifestyle and smoker status.

See Also:

Please note that all definitions are intended for general guidance only. For official and current definitions you should always double check your policy wording.

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