Your greatest asset is your ability to earn an income. Without it, all of your plans are at risk. If you are unable to work in your own occupation due to sickness or injury, Income Protection can provide a replacement monthly income for you until you return to work or turn 65 or 70 (retirement age).

You could put money aside so you have it available when you need it, but this is often not practical. The alternative is to insure it by putting aside a smaller amount so you can receive a proportion of your income if you are disabled.

Insurers will insure a proportion, or replacement ratio, of your income. This is the amount they pay if you are disabled. This proportion is determined by the insurer and is designed to replace your income needs but ensure there is still some financial incentive to return to work.

Income protection generally comes in two flavours Agreed Value and Indemnity Value.

Agreed Value
Agreed Value is just that. Agreed at application time and will give you more certainty at claim. Because Agreed Value is not taxed at claim time you don't have to insure the tax portion, so the insurer sets a maximum replacement ratio at 55% to account for the lack of tax and to ensure the financial incentive to return to work is there. There are some providers who take a taxable approach to this product and we would discuss the suitability of this for your situation at the time of review.
Indemnity Value
This is the opposite of Agreed. We discuss a cover level now and at claim time you have to prove the loss in income. Because that loss is associated with a taxable income the benefit is also taxable. So with Indemnity Value what you receive in your hand can fluctuate based on your situation at time of disability. The insurers set the maximum replacement ratio at 75%, which accounts for the additional tax requirement and ensures there is still a financial incentive to return to work.

Key Person Protection - an element of your business continuity planning focused on those individuals who are key to your business' success.