Formerly known as “Permanent Health Insurance” (PHI) or “Long-term Income Protection” (IP) is an insurance policy that pays out if you’re unable to work due to injury or illness.You may have seen the Paul Whitehouse-fronted Aviva advert, or Unum’s Back-up Plan adverts – both promoting income protection.
IP usually pays out until retirement, death or your return to work, although short-term IP policies are now available at a lower cost. IP doesn’t usually pay out if you’re made redundant, but will often provide ‘back to work’ help if you’re off sick.
Millions of us have policies like private medical insurance and payment protection insurance, sold to us over the years by salespeople who convinced us we needed protecting. However, whilst they were right about the protection, they were often wrong about the policies. The one protection policy every working adult in the UK should consider is the very one most of us don’t have – income protection.