Income Protection Explained
Learn how income protection works, deferred periods, and benefit limits.
What is Income Protection?
Income protection (IP) provides a regular income if you cannot work due to illness or injury. Unlike CI which pays a lump sum, IP provides ongoing monthly payments, typically until you return to work, reach retirement age, or the policy ends.
Key Features
- Deferred period - the waiting time before payments begin (typically 4-52 weeks)
- Benefit amount - usually capped at 50-70% of gross income
- Own occupation vs Any occupation definitions
- Short-term vs long-term income protection
Deferred Periods
The deferred period is how long you must be unable to work before benefits start. Shorter periods cost more but provide earlier protection. Consider employer sick pay when choosing - if an employer offers 6 months full pay, a 26-week deferred period may be appropriate.
Occupation Definitions
Own occupation is the gold standard - you're covered if unable to do YOUR job. Suited occupation means you're covered if unable to do a job suited to your skills. Any occupation is the strictest - only covered if unable to work at all.