How Does Covid Affect My Income Protection Insurance?

If you recently took out an Income Protection insurance policy or you are thinking of purchasing short-term income protection, you may be wondering whether the policies include Covid-19.

The short answer is yes and no. Most Income Protection insurance policies do include coronavirus. However, pay-outs are deferred for at least a month by which time you should have recovered.

Having said that, if you have no way of recouping your income in the event of illness or accident, an Income Protection insurance policy could provide a solution.

Do You Need Income Protection Insurance?

Income Protection insurance is often overlooked. However, it could help you pay the mortgage, bills and regular family expenses if you are unable to work and lose your salary.

These types of policies cover a portion of your salary if you were to lose your job due to illness, an injury caused by an accident, and in some cases, redundancy.

Most Income Protection insurance policies cover up to 70% of your salary or the first £2000 - whichever is less. Therefore, short-term income protection helps to cover your monthly expenses once the salary you receive from your employer is no longer available.

Will Income Protection Cover Me If I Am Off Work Due To Coronavirus?

Because Income Protection insurance covers illness, your short-term policy should cover you if you contract Covid-19. According to comparethemarket.com, most insurance policies include coronavirus.

However, it should be noted that most policies will only cover you if you fall ill with coronavirus and subsequently lose your salary. These types of insurance policies will not cover you if you lose your job because the company you work for run out of business due to the pandemic.

What’s more, the Income Protection criteria indicates that you must declare any illness or underlying causes when you take out the policy. Existing illnesses that you are aware of could affect your ability to access Income Protection insurance or affect the pay-out on a claim.

The other thing to note is that Income Protection policies have a deferral period of at least 30 days. This means that you are not eligible to claim on your policy if you contact coronavirus unless the illness keeps you out of work for more than the 30 day deferral period.

Given most people recover from Covid-19 in two to three weeks, it’s unlikely you would be able to claim.

If you are in full-time employment, you should be covered by statutory sick pay so are entitled to receive a full salary anyway.

Self-employed will probably not benefit from income protection insurance due to covid-19 unless your illness extends beyond 30 days. If you have any underlying illnesses you are not aware of, you may not be fit for work for several months.

To compensate for the loss of earnings in this scenario, you should be able to apply for government benefits such as Universal Credit or Employment and Support Allowance.

For more information about how our income protection insurance can benefit you and your family, give us a call on +44 (0) 20 3740 4431 or send an email to enquiries@bettersafe.com.