Income Protection Insurance NI

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What is income payment protection insurance NI?

NI income protection insurance is a policy that will protect you against loss of income as a result of an accident or sickness. It will provide a monthly tax free income. The period is typically selected by you when you take out the policy, by selecting the policy term. Typical term options are from 1 year until 65 years. The longer the term, the more expensive will be the policy. 

What Can Income Protection Cover?

The purpose of any income protection policy is to cover your personal financial commitments. Examples of debt repayments include mortgage, credit card and personal loans. The most common cover is for mortgage protection, which is sometimes taken out with a mortgage. If you are interested in mortgage protection, check first with your loan provider, as it may also be included in your monthly payments.

  • Income protection -  This is not to be confused with (PPI) which has had very bad press. Income protection pays out direct to you an agreed percentage of your salary of an agreed time scale. The cover normally starts 3 months after employment ended and normally will pay out for a period of 12 months
  • Mortgage payments (MPPI) Protection should you be unable to make your mortgage payments. Some take out this cover with a new mortgage, it normally starts to pay your mortgage payments 3 months after your earnings have stopped 
  • Divorce Maintenance Payments - Also referred to as spousal maintenance. These are payments agreed during divorce proceedings if the spouse is unable to support themselves financially without it. 
  • Other : Above are the main categorises and for many it can confusing, If you are unsure simply Select Other during the quote process and discuss your requirements with the insurance company.

What Can Trigger Income Protection Payouts?

An income protection policy can be triggered by one of the following events that results in loss of earnings, an accident, sickness or unemployment. In setting up an income protection policy, you can choose an event or events that will trigger the policy, from the list below.

  • Accident & Sickness
  • Accident & Sickness & Unemployment
  • Unemployment Only

How much Does Income Protection insurance NI Cost?

The cost of income protection NI will be determined by a number f factors. The key determining factors are listed below, plus the range of cover required.

  • The percentage of income you’d like to cover, 65% is a typical example
  • Your age, current health and any bad habits, example smoking or drinking more than the recommended limits 
  • The waiting period before the policy starts to pay out
  • The range of illnesses and injuries covered

The range of cover will also be a key determining factor, income protection NI is available to cover :

  • Accident and Sickness
  • Accident and Sickness, plus Unemployment
  • Unemployment Only

Do you Need Payment Protection

This is a subjective decision that you must decide upon. It provides you peace of mind should you no longer have access to a steady income stream, but it does come at a cost.  As mentioned, the costs will be determined by a number of factors. We work in partnership with QuoteZone who have a panel of specialist brokers. To get an idea of the cost, simply select the Get Quotes option and provide basic, but necessary details to enable the brokers to provide you a range of quotes and options for income protection NI.  

If the situation arises that you are unable to work as a result of sickness or injury, you might assume your employer will continue to pay a percentage of your fixed salary. This will depend on your employer's sick payment scheme. Most schemes will only pay out for a fixed period of time, normally going from full pay to half pay and then to statutory sick pay. This can all happen in a period of 6 months, at which stage you will have to dig into any saving to cover your financial commitments

The Self Employed and Payment Protection  

If you are an employee, you will have a work related sick payment scheme. The benefit that these schemes offer do vary. Ranging from excellent schemes provided by the NI government to very basic schemes by smaller employers.  However, if you are self employed, receiving sick pay is not an option. In these circumstances (self employed or sole trader) income protection looks more attractive. It is possible to set the term for 1 year to reduce the cost. During this period, if you did have an illness whilst self employed that entailed a long recovery, you  would have the benefit of a steady income stream during that downtime.       

Which is the Best Income Protection or Critical Illness Cover?

Critical illness insurance (CII), which can be part of a life insurance NI policy and Income protection insurance (IPP) are two different types of cover, which is best will depend on your personal circumstances.

Income Protection FAQ's

What happens if I don't pay my premiums?

If you fail to make your regular payment, the provider will cancel the policy and the cover will stop. If you have just missed one payment, make contact with the insurance provider as they will normally allow you a grace period to make up the missing payment

Is my Income Protection benefit tax-free?

If the payments are being made from personal taxed income, the benefits from income protection are tax free according to the current tax regulations, please follow the link for the latest information on this tax ruling as it related to unemployment and sickness benefits insurance payments.

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