Income protection pays a monthly benefit if illness or injury stops you working. Insurers typically cap the benefit at around 60 percent of your gross income, since it is usually tax-free. A sensible target is enough to cover your essential outgoings — rent or mortgage, bills and food — so you can keep the roof over your head while you recover.
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Frequently asked questions
Why is cover capped at around 60 percent?
Because the benefit is normally paid tax-free, insurers limit it to roughly your net income so there is still an incentive to return to work.
What is a deferred period?
It is how long you wait after stopping work before the benefit starts — commonly 4, 13 or 26 weeks. A longer deferred period lowers the premium.