Head of Content
Former Senior Protection Advisor
Income protection provides a safety net for anyone who’s concerned about being unable to work due to illness or injury, but what are your options if you only want it for the short term?
Here you will learn all you need to know about short term income protection insurance, including how long it covers you for, how to get it and more?
What is short term income protection insurance?
Short term income protection is a type of insurance that provides a tax-free monthly payout to cover lost earnings if you are unable to work due to accident or injury, for a limited time.
The main difference between short term income protection and standard income protection is that the latter can last right up to your retirement, a short term policy would typically only cover you for a period of six months to two years, although longer agreements are available.
The only other factor that sets short term and long term income protection apart is the price. Premiums tend to be higher for longer policies, so short term insurance is usually cheaper.
Types of policy available
Short term income protection insurance is available as three types of policy:
1. Accident and sickness cover: Pays out if an accident or illness listed in the terms of the policy prevents you from working for the agreed period.
2. Unemployment cover: Has you covered if you are made redundant from work, but not if illness or injury prevents you from doing your job.
3. Accident sickness & unemployment cover: Covers policyholders against extended work absences as a result of illness, injury or redundancy.
How does it work and what can it be used for?
Short term income protection cover provides a temporary safety net by covering a portion of your monthly salary if you need to be off work due to illness, injury or, in some cases, redundancy, while the policy is active. It’s designed to bridge the gap until you return to work.
Here are the key features of short term income protection insurance:
-
How much it pays out: Usually between 50% and 70% of your monthly income. Some providers impose a monetary cap on the payments - e.g. £2k per month.
-
When it kicks in: Policyholders can set a deferred period of 4-52 weeks.
-
How long it covers you for: Usually 6-24 months or up to five years, or until you return to work, retire or pass away - whichever happens soonest.
-
What it protects you against: Most illnesses and injuries that would prevent you from working for a prolonged period (with some exclusions). Policies that include unemployment cover will also pay out in the event of a redundancy.
Income protection can be used to cover the following outgoings while you’re out of work:
-
Rent or mortgage payments
-
Household bills
-
Childcare costs
-
Weekly shopping
-
Loan or credit card payments
-
And more
How much does short term income protection cost?
The cost of short term income protection insurance is determined by the monthly fee the insurer sets for your policy, which they will calculate based on the following factors:
-
Amount of cover: The higher the percentage of your monthly income the policy covers, the more expensive the premium is likely to be.
-
Length of coverage: Short term income protection is less expensive than longer term cover, as premiums tend to rise the longer the policy will last for.
-
Deferred period: The deferred period refers to how long it takes for your payouts to kick in after your work absence starts. This is something you can negotiate with your provider but policies with longer deferred periods have lower premiums.
-
Health & lifestyle: Factors including smoking, drinking alcohol regularly, having underlying medical conditions, working in high risk jobs and having dangerous hobbies can all increase the level of risk for the insurer and drive up premiums.
-
Age: Premiums are higher for older policyholders compared to younger ones.
Quote comparison
A typical quote for short term income protection would be roughly between £13.19 and £22.55 per month. These are example premiums for a £2k monthly payout for a 30-year-old male with no risk factors, over a period of 5 years with a four week deferred period.
To put into context how much more you are likely to pay for a longer-term agreement, the same amount of coverage for this hypothetical customer would cost between £23.61 and and £32.81 per month if it was taken out with a term length spanning 20 years.
The above quotes are from genuine income protection providers but are presented for example purposes. Hit the button below to begin a free, no-obligation chat with one of our protection insurance providers, who can provide you with a range of bespoke quotes:
Get your bespoke income protection quote today
Typical exclusions
The exclusions (i.e. factors that could prevent your policy from paying out) are the same for short term income protection as they are for longer coverage. Typical exclusions include:
-
Pre-existing medical conditions
-
Self-inflicted injury or illness caused by ignoring medical advice
-
Drug or alcohol abuse
-
Pregnancy and child birth with no complications
-
Injuries from criminal activity
-
Injuries sustained at war
-
Being sacked from work or taking voluntary redundancy
Your policy will also not pay out if you gave false information during the application process, such as lying about a pre-existing health condition or a family history of one.
Which providers offer short term critical illness cover?
Some mainstream insurance providers won’t offer term lengths shorter than five years, so it’s a good idea to speak to a whole-of-market protection adviser, like us, to gain access to a wider pool of insurers, including those who offer coverage spanning less than five years.
Income protection providers who offer policies of five years and under include:
Get in touch with us and one of our advisers will compare the deals available to you from the above insurance providers with products from across the market and your behalf.
Why choose Teito for your income protection needs?
Our insurance advisers are experts when it comes to income protection and they have access to the entire market, including exclusive deals you can’t get elsewhere.
Here are just some of the reasons people choose us for their income protection:
-
We can help you access more insurers and quotes
-
Bespoke advice about which policy best suits your needs
-
Our service is 5-star rated on leading review websites
-
Your first consultation is free
Ready to take advantage of a free, no-obligation with an insurance expert who specialises in short term income protection policies? Get started here.
FAQs
Yes. Short term income protection insurance is available for self-employed people to help them get by in the event of illness or injury preventing them from working. To calculate the amount of cover you need, you will need to work out your average earnings over a 2-3 year period (or as many years as you’ve traded for) and calculate 50-70% of that figure.
You will need accounts to evidence your earnings over the period in question as the insurance provider will be keen to see these during the application process.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.