1. There is no set list of illnesses so make sure you understand the definition used for being unable to work, such as ‘unable to carry out your own occupation’ which is better for consumers than other alternatives such as ‘work tasks’.
2. Check what benefits you are already entitled to from your employer or the State (if unsure ask your employer, ask an IFA or check online).
3. Ensure premiums are competitive on a like-for-like basis by shopping around and speaking to an independent adviser.
4. Make sure you know if the premiums are guaranteed throughout the policy, linked to age or inflation, or reviewable.
5. Check how long the policy will pay out for – long term income protection pays until retirement, however shorter ‘budget’ plan options are also available which reduce the premiums and may provide cover over a realistic time period over which you might suffer financially if unable to work.
6. Choose a suitable amount of cover (at least enough to cover essential expenses) and take cover until a realistic retirement age (some insurers allow cover up to age 70).
7. Ask about the insurer’s track record for paying claims – not all providers publish this information but a growing number do (with most providers paying in excess of 90%).
8. Choose a suitable ‘deferred period’ – this is how long you need to be unable to work before the claim is paid – it can be typically be anything between one day and 12 months and the longer the deferred period is the less expensive premiums will be.
9. Check what practical help you might receive in the event of claim such as counselling and rehabilitation options, which can help you to become employable again after a long absence.
10. Make sure you disclose all health issues when applying – if in doubt, write it down.
Roy McLoughlin, IFA at Master Adviser and a member of the IPTF, said: “Income protection sits at the head seat of the protection insurance table because it is the claim that statistically is most likely to happen compared to critical illness cover and life insurance.
"However, sometimes the most suitable policies are not available on a direct basis, for example those from some Friendly Societies, who offer own occupation cover to more manual and riskier occupations, but only sell their plans via qualified financial advisers.
"Few people realise that IP insurers are more generous than the State, and pay a much higher percentage of the claims they get too.”
Kevin Carr, CEO of Protection Review, added: “The majority of policies are based upon the better 'own occupation' definition where claims are typically paid without fuss.
"Anyone buying cover should insist on the better definition and those who already have a policy should check their details.
"For a range of reasons income protection isn’t easy to buy online and so speaking to an expert can be crucial.”
