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Types of income protection cover

Let's talk about your Income Protection options

The types of income protection you can choose from

Each type will provide a regular income if you're unable to work because of an accident or illness.

Level Income Protection cover

Level cover means that the amount of cover you choose is fixed when your policy starts and won't change. This means it won't keep up with inflation and will buy you less in the future.

How much cover can I have?

  • The most cover you can have is 60% of your annual earned income before tax. This does not include any income from savings or investments.
  • The minimum amount of cover you can apply for is £100 a month. The maximum amount of cover you can apply for is £20,833 level cover or £14,583 inflation-linked cover.
  • If you own a limited company then your income* can also include dividend income from your business as long as:
    • the dividend income is clearly related to your work activities.
    • the frequency of dividend payments must be of an established pattern, rather than irregular one-off payments.
    • the dividends are paid from annual profits net of tax. If the dividends are higher than the profit figure, we will use the net profit figure instead.

* Your income can also include dividends paid to your spouse or civil partner as long as they are also a shareholder, and they don't take over the running of the business. Any dividends paid to your spouse or civil partner must be appropriate for their level of shareholding, and must have been declared for tax purposes. However if your spouse or civil partner has used the same dividend income for their own income protection cover, it can't also be included in your income.

 

Inflation-linked Income Protection cover

The amount you are covered for will increase in line with inflation. The premium you pay will go up each year in line with inflation multiplied by 1.5. We measure inflation using the Retail Prices Index.

How much cover can I have?

  • The most cover you can have is 60% of your annual earned income before tax. This does not include any income from savings or investments.
  • The minimum amount of cover you can apply for is £100 a month. The maximum amount of cover you can apply for is £20,833 level cover or £14,583 inflation-linked cover
  • If you own a limited company then your income* can also include dividend income from your business as long as:
    • the dividend income is clearly related to your work activities.
    • the frequency of dividend payments must be of an established pattern, rather than irregular one-off payments.
    • the dividends are paid from annual profits net of tax. If the dividends are higher than the profit figure, we will use the net profit figure instead.

* Your income can also include dividends paid to your spouse or civil partner as long as they are also a shareholder, and they don't take over the running of the business. Any dividends paid to your spouse or civil partner must be appropriate for their level of shareholding, and must have been declared for tax purposes. However if your spouse or civil partner has used the same dividend income for their own income protection cover, it can't also be included in your income.

types of premium

You can choose between guaranteed and reviewable premiums

Guaranteed premiums

Your premium is guaranteed. This means it will not change, unless you have chosen inflation-linked cover.

If you have chosen inflation-linked cover, your amount of cover will increase by inflation each year and your premium will increase by inflation multiplied by 1.5.

Reviewable premiums

When you apply for your policy we will work out the premium you need to pay based on a number of assumptions. We then review these assumptions on an ongoing basis and if we need to change our assumptions then we will look at the premium you pay to see if it needs to change. This means your payments are not guaranteed to remain the same for the whole of the term of the policy.

The premium you pay will not be changed within the first 5 years, after that we can change it. Your premium could then go up, go down, or remain the same.

Any change in premium will be in addition to any inflation-linked changes in your premium if you have chosen inflation-linked cover.

Compare our premiums and cover

We've created the table below to help you compare your income protection options.

Type of premium and cover Guaranteed premiums with level cover Reviewable premiums with level cover Guaranteed premiums with inflation-linked cover Reviewable premiums with inflation-linked cover
Your premium stays the same yes *  *
Your level of cover stays the same yes yes *  *
Your premium is reviewed each year (after the first 5 years)
yes
 yes
Type of premium and cover Guaranteed premiums with level cover Reviewable premiums with level cover Guaranteed premiums with inflation-linked cover Reviewable premiums with inflation-linked cover
Your premium stays the same yes *  *
Your level of cover stays the same yes yes *  *
Your premium is reviewed each year (after the first 5 years)
yes
 yes

Financial Advice

Need advice?

We've chosen to partner with LifeSearch to offer you independent advice on which protection products are right for you.

Mon to Thu - 8am - 8pm     Fri 8am - 6pm 

For Text Phone first dial 18001

Calls will be recorded and/or monitored for training and audit purposes.

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