Answers to your questions about income protection 👇
Ask Away: Answers about Income Protection with Anorak
Thank you to everyone that submitted questions about income protection. You can find answers down below, answered by our partner Anorak 👇
Q: What actually is income protection insurance? And how does it work?
A: It’s an insurance policy that pays out a monthly income if you’re unable to work for any medical reason – physical or mental, illness or injury. It starts paying out after an agreed waiting period, which you choose when you take out the policy. People typically claim on their income protection for things like long-term back pain, serious injuries caused by accident, and stress or depression, but also for other illnesses like cancer, heart attacks and strokes.
Q: It might sound clear from the name, but what are the exact advantages for a freelance graphic designer to have income protection?
A: Getting covered can be of particular importance to self-employed people because they don’t tend to have sick pay (it's generally only provided by employers). This means time off work for medical reasons can potentially have a quicker financial impact on self-employed people than it would on those who do have sick pay. Income protection can therefore provide a safety net that you’d otherwise be without.
Q: What percentage of my income can be protected?
A: Most insurers will allow you to cover up to around 50-60% of your pre-tax income. This is usually enough to make sure your essentials are covered while you’re unable to work and earn an income. Giving you peace of mind that a period of ill health wouldn’t leave you facing financial hardship.
Q: If I become ill and need to make a claim, what exactly do I need to have prepared? What should I keep records of to help my case?
A: To make a claim on your income protection policy, you simply need to be signed off work by a medical professional. You should contact your insurer as soon as possible to let them know you’ve stopped working, provide any medical information required, then your policy will start paying out after your agreed waiting period.
Q: What does it mean if I’m covered for my ‘own occupation’?
A: ‘Own occupation’ is one the definitions insurers use to assess your inability to work. If your income protection policy has own occupation definition, it means the policy will pay out if you’re unable to do your own job. This is preferable to other definitions which may require a greater level of incapacity – e.g. being unable to do any job or a similar job.
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