INCOME PROTECTION

Illness, accident or disability can happen to anyone. Currently, approximately '2.2million people of working age are off for at least 6 months because of sickness and disability and more than 2.6 million people claim incapacity benefit' (Which?, Income Protection, 2008).

Many organisations offer comprehensive income protection benefits for their employees. The NHS in particular provides cover based on basic salary (not taking into account band uplifts) as illustrated in the table. After the defined periods however, your income will stop and it is your responsibility to ensure that appropriate cover is in place to protect yourself.

Income Protection policies pay a monthly tax free income (normally 60% of your salary) if you become unable to work due to illness or disability. Providers of this type of policy begin paying after you have been off work for a defined period called the 'deferred period'. The deferred period is chosen by you and highly recommended to be scheduled to start paying once your specified NHS payment periods stop. The monthly premium gets lower the longer the deferred period you choose. The policy continues to pay until you are able to work again or until the end of the term, usually retirement.

It pays you a tax free income in the event of you being totally unable to work in your chosen profession, directly as a result of illness or injury
It should commence payment when your salary or practice drawings reduce or cease. It can supplement any ill health benefits provided by your occupational pension scheme
Ideally, it should pay an ongoing income, to your chosen retirement age which is selected at the outset, or until you can resume your own occupation

It is essential to have cover in the event of you not being able to carry out your OWN occupation. The NHS Income Protection: This depends on the length of your service with the NHS as shown in the following table:

Length of Service Completed	Full Pay Expected	Half Pay Expected
First 4 months	1 month	None
Next 8 months	1 month	2 months
After 1 year	2 months	2 months
After 2 years	4 months	4 months
After 3 years	5 months	5 months
After 4 years	5 months	5 months
After 5 years	6 months	6 months

Unlike some of the major providers of financial planning advice for Medics, we will only advise on policies that carry guaranteed premiums and never reviewable premiums. With guaranteed premiums, you can rest assured that the level of premium will never increase as the years progress, unless of course the level of benefit is increased. Reviewable premiums, as the name suggests, will be subject to change at each stated review period.