Reader Question: Should I take out income protection cover through my employer?
Employer income protection cover
- also known as Group income protection
- offered by an employer as either a free benefit or on a paid for basis
- often cheaper than personal income protection insurance due to the larger group being insured
- benefit is paid to the employer and then passed on to the employee in full or in part
- if you did not contribute to the cost of cover any benefit received will be taxable as earned income
- if you paid the premiums yourself then any benefits received will be exempt from tax
- cover will cease if you leave your employment
- due to the group nature of the policy a health questionnaire is not normally completed
- previous poor health is not normally an issue providing you are fit to work when you apply for the policy
Personal income protection cover
- policy taken out by the individual with premiums paid monthly
- may be more expensive than a group policy due to the individual assessment involved
- benefit is paid direct to the individual insured
- benefits paid under this type of policy are normally tax free
- cover will continue if you change employer
- a health questionnaire will have to be completed and any pre-existing conditions may be excluded
- the individual can select the features of the policy that suit their needs best e.g. when payments start and how long they are paid for
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