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Home Tradesman Insights Short-term income protection: Can you afford to go without it?

Short-term income protection: Can you afford to go without it?

As a tradesman, your livelihood depends on your ability to work. But what happens when an unexpected illness or injury strikes, leaving you unable to earn a living? It’s a scenario that many in the trade industry face, and it’s one that can have devastating financial consequences. 

This is where short-term income protection comes in – a safety net that can help you weather the storm and get back on your feet.

What is short-term income protection?

Short-term income protection is a type of insurance designed to provide you with a temporary financial buffer if you’re unable to work due to ill health or injury. If you find yourself in this situation, the policy will pay out a percentage of your usual monthly income, typically between 50% and 70%, for a set period of time.

Unlike long-term income protection, which can cover you until retirement, short-term policies usually pay out for between six months and two years. This can be a lifeline for those who don’t have substantial savings or sick pay to fall back on.

Who needs short-term income protection?

If you’re self-employed, don’t receive sick pay, or have a family to support, short-term income protection can be a valuable safety net. It can help you cover essential expenses like mortgage repayments, rent, household bills, and food shopping while you’re unable to work.

Even if you do have some savings, it’s important to consider how long they would realistically last if you were off work for an extended period. 

What does short-term income protection cover?

Short-term income protection can cover a wide range of illnesses and injuries that prevent you from working, including:

  • Back pain
  • Broken bones
  • Mental health conditions like depression and anxiety
  • Certain serious illnesses like cancer or heart disease

Some policies may also cover you for redundancy, providing an extra layer of financial security in uncertain times.

How does short-term income protection work?

When you take out a short-term income protection policy, you’ll choose a deferral period – the length of time you’ll need to wait before you can start receiving payments. This can range from a few weeks to several months, depending on the provider.

The longer the deferral period, the lower your premiums will be, but you’ll need to make sure you have enough savings or sick pay to cover your outgoings during this time.

Once the deferral period is over, you’ll start receiving monthly tax-free payments until you’re able to return to work, or until the payment period ends – whichever comes first. If you need to claim again in the future, even for the same condition, you should still be eligible for payments.

Choosing the right policy

When shopping for short-term income protection, it’s important to compare policies from different providers to find the best fit for your needs and budget. Consider factors like:

  • The percentage of your income the policy will cover
  • The length of the payment period
  • The range of illnesses and injuries covered
  • Whether redundancy cover is included
  • The length of the deferral period
  • Any exclusions or limitations

It’s also worth checking whether you have any existing cover through your workplace or other insurance policies, as this can affect the level of cover you need.

Tradesman Talk

As a tradesman, your skills and expertise are your most valuable assets. But without your health, you can’t put them to use. That’s why short-term income protection is so important – it provides a financial safety net when you need it most, helping you focus on your recovery without worrying about how you’ll make ends meet.

At Tradesman Saver, we offer comprehensive insurance policies tailored to the unique needs of tradesmen like you. Our short-term income protection cover is an optional extra that can be added to your policy, providing you with up to £250 a week or 60% of your gross weekly income if you’re unable to work due to illness or injury.

Talk to us today about how we can help you build a comprehensive insurance plan that gives you the peace of mind you need to thrive in your trade.

Dean Laming

Dean Laming is a Chartered Insurance Broker with more than 25 years insurance experience. Through various underwriting, operational and management roles, Dean has built up extensive knowledge of how to run a business and is now Managing Director of Tradesman Saver, part of the wider Henry Seymour Group.

All articles by Dean Laming

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