Income Protection is a replacement income payable to a person if they are unable to work as a result of illness or injury. The income will be payable for the duration of the cover which is decided at the outset, usually to coincide with a persons expected retirement age.
In additional to a replacement of income (up to a maximum of 75% of the income or salary at the time of claim), it is also possible to incorporate additional payment cover to continue pension payments so that when the cover under the income protection policy ceases, the covered person has access to a properly funded pension for their retirement years.
Income Protection can be set up by a self employed person to cover earnings and contribute benefits from full tax relief in the same way as pension contributions.
Cover can also be established by an employer on behalf of Directors or Employees and benefits from full corporation tax relief again in the same way as pension contributions.
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