Income Protection
Pays you a regular tax-free income if you’re unable to work due to illness or injury.
What is Income Protection Insurance?
Income Protection is a type of insurance designed to provide you with a regular income if you’re unable to work due to illness or injury. Unlike one-off critical illness cover, it pays out until you can return to work, retire, or reach the end of your policy term. It’s particularly valuable for anyone who relies on their salary to pay essential living costs such as mortgage/rent, bills, or family expenses.
- Replaces a portion of your salary if you can’t work due to illness or injury.
- Provides long-term financial security beyond statutory sick pay.
- Flexible cover options to match your needs and budget.
How can we help you?
Contact us at Templar Mortgages - 0121 453 4244.
How Does Income Protection Work?
What is a Relevant Life Plan?
A Relevant Life Plan is a company-funded life insurance policy that provides financial protection for an employee’s beneficiaries. It pays out a tax-efficient lump sum if the employee dies or becomes terminally ill while working for the business.
Who Can Benefit from a Relevant Life Plan?
Small businesses and limited company directors can benefit by accessing affordable cover without needing a group scheme. High-earning employees gain additional life insurance without it affecting their lifetime pension allowance. Families also benefit, as payouts provide tax-free financial support in the event of death or terminal illness.
Are Premiums Tax-Deductible?
Premiums are usually treated as a business expense for employers and are generally tax-deductible, making a Relevant Life Plan a cost-effective benefit.
Is the Payout Tax-Free?
When the policy is arranged under a discretionary trust, the payout is normally free from income tax, National Insurance, and inheritance tax.
Can Critical Illness Cover Be Added?
Some providers allow critical illness cover to be included with a Relevant Life Plan, depending on the terms of the policy. Businesses should confirm availability with the insurer before setting up cover.
What Happens If an Employee Leaves?
Many policies offer the option to convert the plan into a personal life insurance policy if the employee leaves the company, allowing them to maintain cover independently.
Why Consider Income Protection?
Having an income protection policy means peace of mind that you and your family are financially secure, even if you can’t work. Unlike employer sick pay, which may be limited, income protection gives you consistent long-term support.
FAQ: Income Protection
How much of my income will be covered?
Most policies cover between 50% and 70% of your gross income, paid monthly and tax-free.
How long will payments last?
You can choose short-term cover (e.g. 1–2 years) or long-term cover until you return to work, retire, or the policy ends.
Can I get income protection if I’m self-employed?
Yes, income protection is especially useful for self-employed workers who don’t receive sick pay from an employer.
Does income protection cover redundancy?
No, standard income protection only covers illness and injury, not job loss due to redundancy.
How much does income protection cost?
The cost depends on your age, health, occupation, cover amount, and length of deferred period.
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