This type of protection which is also known as ‘income replacement’ will provide you with a predetermined monthly income if you are unable to work for a long period due to accident or illness.
The income is normally paid after a specific deferred period (3 or 6 months) and will continue until you return to work.
Under this type of policy the maximum cover that can be provided will be 75% of your normal income less any State incapacity benefit.
We normally recommend that policies run for a period up to your retirement date, or at least until the mortgage is repaid or until children become financially independent.
Unfortunately, State incapacity benefit is fast being eroded, and currently there are in excess of 1.5million people in this country who have been unable to work for over a year because of sickness or disability (source Department of Social Security). As there is far greater chance of an individual becoming incapacitated rather than dying before retirement, it is vitally important to ensure that you can obtain an income in these circumstances.
The precise amount of cover, the period before the benefit becomes payable and the ultimate date when the plan ceases will be a matter of personal choice.