Check your existing income protection policy

Insurance brokers have reported an increase in enquiries about income protection cover since the pandemic outbreak, with people concerned about becoming ill and being unable to continue working, or worried about losing their jobs.

Income protection explained
Income protection policies provide a monthly payment (payable after a waiting period) to help replace your income if you are unable to work because of an accident, illness or involuntary redundancy. Short-term income protection policies will pay out for a fixed amount of time (typically six months or a year), whereas long-term income protection policies are designed to replace your income (up to a maximum of around 60% before tax) until retirement age, death or for a specified period of time.

Am I covered for COVID-19 under my existing policy?
Policyholders who took their policies out before the outbreak should be covered under the existing terms and conditions, for both short-term and long-term income protection.

Fortunately, most people who get the virus have mild symptoms or recover quickly, usually within a few weeks. Because most income protection policies have a waiting period before money is paid out and also a minimum claim period of 30 days, you are unlikely to be able to claim under the sickness element of your policy.

However, if you are an existing policyholder who had unemployment cover included in the policy and you are made redundant, you should be able to make a claim for enforced redundancy.

Can I take out a new income protection policy now?
It is still possible for new customers to purchase accident and sickness cover, although you should be aware that pre-existing medical conditions will be excluded and insurers may have changed their terms for new customers.

However, the situation is not the same for unemployment cover, with brokers reporting that cover is unavailable for new customers, both as a standalone policy and under ASU (Accident Sickness and Unemployment) policies.

Managing existing policies
The good news is that you can renew your short-term and long-term income protection policies, although the terms may change at renewal.

Furthermore, some insurers are offering three-month payment breaks for those who are unable to pay their premiums at the moment.

Here to help
It’s important to remember that all protection cover should be bought for the short, medium and long term and should be tailor made to suit your own circumstances, rather than just opting for the cheapest premium.

As with all insurance policies, conditions and exclusions will apply.

Key takeaways

• Insurance brokers have reported an increase in enquiries about income protection cover since the outbreak
• Income protection policies provide a monthly payment (payable after a waiting period) to help replace your income if you are unable to work because of an accident, illness or redundancy
• Short-term and long-term income protection is available
• Exiting policyholders should be covered under the exiting terms and conditions
• People with mild COVID-19 symptoms are unlikely to be able to claim due to a waiting period and minimum claim period
• Existing policyholders with unemployment cover, who are made redundant, should be able to claim
• New customers can purchase accident and sickness cover, but unemployment is currently unavailable
• You can renew existing policies, although terms may differ
• Some insurers are offering premium payment breaks

We can advise on existing policies and find the most suitable cover for new customers