What is income protection insurance and can I use it to protect my finances against coronavirus?

INSURERS are seeing a spike in people looking to buy income protection insurance to guard against the financial effects of coronavirus.

But new customers may find that policies now have exclusions which mean they will not pay out if you get Covid-19.

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As a result, several comparison sites have stopped doing comparisons for this sort of insurance – as they fear customers will not get the protection they need.

Fortunately, anyone who took a policy out before the coronavirus pandemic should still be covered.

But some 30-day limitations on cover may mean that workers who are only sick for a couple of weeks won't get a payout.

Here's everything you need to know about income protection and how it has been affected by coronavirus.

What is income protection insurance?

Income protection insurance is designed to help if your pay takes a hit, usually due to illness, accidents or redundancy.

It can cover everything from mortgages and loans to general living costs if the policyholder can’t work.

There are a few different types of cover people can buy including income protection insurance, short-term income protection, critical illness cover and sickness and accidents cover.

The idea is that if you can't work, the policy kicks in and pays a percentage of your salary or meets your bills until you can work again or the policy ends.

How coronavirus is impacting new customers who want income protection

Comparison site ActiveQuote said it has had a surge in people either looking to buy new cover or wanting to check their existing policies.

The Association of British Insurers says that most customers will still be able to get life, critical illness, or income protection insurance at this time.

Unfortunately for new customers, some insurers are bringing in exclusions which means your policy won't work for coronavirus.

  • Short term income cover

AcctiveQuote says that L&G, Trent Services and Firstcall are still accepting new customers for short-term Accident and Sickness cover.
But Firstcall has now placed restrictions for people working in the travel and leisure, retail or manufacturing industries
It said that all the other insurers it works with are not currently accepting new short term policies, but cautions that the situation is changing daily.

ActiveQuote says it has seen some income protection insurance providers change their underwriting terms for new customers meaning that coronavirus may not be covered.

Check the policy wording carefully before you take out any insurance to see what is and is not covered.

Pay particular attention to any exclusions that might relate to coronavirus.


The Money Advice Service outlines five of the benefits or restrictions of income protection cover.

  • It replaces part of your income – if you can’t work because you become ill or disabled.
  • It pays out until you can start working again – or until you retire, die or the end of the policy term – whichever is sooner.
  • There’s often a waiting period before the payments start – you generally set payments to start after your sick pay ends, or after any other insurance stops covering you. The longer you wait, the lower the monthly premiums.
  • It covers most illnesses that leave you unable to work – either in the short or long term (depending on the type of policy and its definition of incapacity).
  • You can claim as many times as you need to – while the policy lasts.
  • Long-term income protection insurance

ActiveQuote says that all the insurers it works with are still accepting new customers looking for long-term income protection insurance.

It says most insurers will consider coronavirus cover except British Friendly who will exclude on all new business cases.

Be warned that most insurance companies will not cover pre-existing conditions, so if you try to take out a policy when you already have Covid-19 symptoms, you are unlikely to be covered for the virus.

Most insurers have added specific pre-screening questions in regards to coronavirus symptoms.

If the criteria are not met, some insurers will exclude coronavirus and its symptoms, and some insurers will decline to offer you insurance.

Some insurers have also introduced other limitations such as age limits or not offering cover to people over a certain age.

Check your policy carefully to see what is covered before you sign up.

  • Unemployment and Accident Sickness and Unemployment covers

Unemployment and Accident Sickness and Unemployment (ASU) covers are no longer available.

Comparison site CompareTheMarket.com has temporarily suspended searches for unemployment cover on its website.

But it is still running searches for accident and sickness covers.

A statement on the website reads: "We’ll resume Unemployment insurance comparison as soon as we’re sure that the prices presented will meet the needs and expectations of our customers."

I already have income protection – will it pay out?

Whether your insurer will pay out depends on the terms and conditions of your policy.

The ABI has warned that most insurance will not cover you if you decide to self-isolate.

It says: "Self-isolation which is not medically advised is unlikely to be covered unless symptoms are severe and continue beyond the waiting period."

Compare The Market adds: "Most income protection policies won’t cover you for the first 30 days – and the Government is currently only recommending 14 days of self-isolation if there is coronavirus in your household."

This may also mean that cover doesn't kick in for people who actually get the virus.

As most people who get Covd-19 recover quickly, the likelihood is that your policy won't pay.

Some short-term income protection policies come into force from day one, these are more likely to cover people who are out of work due to sickness.

Anyone with an unemployment policy that was bought before the coronavirus pandemic should be able to claim if they are made redundant.

Holidaymakers rescheduling trips warned to check their travel insurance will cover rebookings.

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Insurers to give three month payment holidays and refunds to struggling coronavirus customers.


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